We compared financing over five years with leasing over three (then starting a new lease in year four with the accompanying start-up costs). New York sales tax of 6.25% is capitalized for the loan deal; for the lease, the sales tax on the monthly payments is included in the up-front costs, as required by New York. Accrued equity in the car is deducted from total costs shown.

What you’ll pay	Financing	Leasing
Down payment and/or other up-front payments	$2,899	$3,437
Monthly payments	428	239
TOTAL COSTS
After 1 year	8,488*	6,305
After 2 years	9,077*	9,173
After 3 years	11,298*	12,041
After 4 years	13,189*	18,346
After 5 years	16,617*	21,214

* Less the value of the car. Note: Up-front payments do not include title, taxes, or registration. Lease and loan have interest rate or equivalent of 6.99%. Our calculations take into account the opportunity cost of 3% a year in forgone interest on the money used for purchase and down payment or lease start-up costs.