The more expensive the MSRP, the more likely it makes sense to lease the vehicle. There will almost always be a slight premium to lease vs. buy.

There are always exceptions, of course, and personal preference also plays a factor.

As others have posted, sales tax is a factor too, especially in jurisdictions that take a bigger bite. In Canada, sales taxes on a vehicle start at 5% for the federal sales tax, and go as high as a combined 15% depending on the province. (13% here in Ontario). So on a nice new Ram 1500 or loaded Cherokee at $50K, there's $6500 in tax payable immediately if you purchase it outright. That's a big chunk of change that you can't recover if you resell the vehicle privately or don't replace it.

Other factors include problems with the vehicle. If the car turns out to be a lemon, or has shown that it's likely to have big problems out of warranty, you can turn in the car and start fresh. If your vehicle is damaged in a collision as mine was, then you own the diminished value and the stigma of a non-virginal CarFax. With a lease, again, you turn the problem back in and walk away. (my vehicle is not leased, so I will take a another hit if I want to trade or sell it).

Then there's opportunity cost of the money. If we use the same 2020 Ram 1500 at $50K, and you pay cash, that money becomes dead, other than your not having a car payment. However, if you have the cash, take advantage of 0% financing or attractive lease rates, then you can invest the $50K and should be able to generate a 6-7% annual return without undue risk.

The Ram will depreciate, so let's fast forward 3 years and assume that it's now worth $20K. You have paid $30K in depreciation over 3 years, or $10K/year. So the equivalent payment of about $830/month, plus whatever you didn't gain by investing your cash. There's a lot you can lease or buy for that.


Situations in which owning outright is probably better:

- you drive a lot more miles/year than the average
- the vehicle depreciates less than average - e.g. late model Challengers
- the vehicle is somewhat collectible - e.g. Ford GT
- you like to keep your vehicles a long time
- purchase price is modest.

However, if I could lease a loaded new Grand Cherokee for around $300/mo as I see advertised on the Golf Channel and other USA media, it would be a no brainer. Warranty, fresh tires/brakes, and a low, predictable, monthly cost. I know people that spend more than $75/week at Starbucks...personally, I'd take the new vehicle.