Monthly payment | Lower (you pay for depreciation only) | Higher (you pay toward full ownership) |
Ownership | You do not own the car | You own the car when the loan is paid off |
Mileage | Limited (typically 10,000–15,000 mi/yr; overage fees apply) | Unlimited |
Customization | Not permitted | Full freedom |
At contract end | Return, buy, or re-lease | Keep, sell, or trade in |
Wear and tear | Must return in good condition or pay fees | No requirement |
Equity | None — you walk away with nothing | Vehicle builds equity over time |
Tax deduction | Does NOT qualify for the 2025–2028 auto loan interest deduction | Qualifies if new and U.S.-assembled |
Best for | Drivers who want a new car every 2–3 years, drive low miles, and prefer lower payments | Drivers who want long-term value, drive high miles, or want to build equity |
