Why Car Leasing Is Riskier Than Ever in Today’s Market
Written by
Peter Burns
Edited by
Molly Sullivan
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Car shoppers usually face two choices: buy or lease. Buying means paying the full price upfront or financing with a car loan to gain full ownership. Leasing, by contrast, means paying monthly fees for a set term, after which you return the car to the dealership.
Both paths have trade-offs. Buying gives you ownership and resale value, but you also shoulder the maintenance costs and depreciation. Leasing lets you drive newer models with fewer repair bills, but you never build equity.
For many, the leasing option suits their lifestyle. But in 2025, it’s becoming riskier for three reasons.
Fewer Lease Maturities
When you lease, you return the car at the end of the agreement, known as the lease maturity, which is typically three years. Normally, that creates a steady flow of used cars for dealerships. But the pipeline is shrinking today.
During COVID-19, the number of people signing leases dropped significantly. As a result, far fewer leased cars are being returned to dealerships in 2025.
S&P Global predicted lease maturities would drop by 41% in the first half of 2025 compared to 2024 — about 1 million fewer vehicles. This means you’ll have fewer choices and less bargaining power.
Rising Costs
Experian reports that monthly lease payments are increasing by 3.3%, from $638 in 2024 to $659 this year. One reason is that pandemic-era supply chain issues, especially the semiconductor shortage, drove up car prices. Tariffs on imports like steel and aluminum further increased costs. The uncertainty of future trade policies continues to make selling difficult as well.
Volatility
Market swings also make leasing risky. Your monthly payment is based on the car’s residual value, its projected worth after the lease ends. If the market shifts and the car ends up worth less than predicted, you’re stuck paying above-market rates. And if it’s worth more than the residual value, you don’t benefit — the dealer does.
How To Lease a Car in 2025 the Right Way
Despite the risks, leasing might be the right choice for you. To protect yourself:
- Research residual value. Don’t just accept the salesperson’s estimate. Look it up for yourself.
- Calculate the full cost. Consider the down payment, fees, interest and total payments, not just the monthly rate.
- Shop around. Dealers sometimes offer deals to move cars, but “deal” doesn’t always mean “lowest price.”
- Pick in-stock vehicles. If the dealer must order your car, you’ll have little leverage.
- Lease a used car. Look for low-mileage, used options and take advantage of shorter contract terms and lower monthly payments.
- Choose a maintenance package. Major repairs are often covered under the car’s original warranty, but you’ll still need to pay for oil changes and minor repairs. Some packages cover these costs, including everything in your monthly payment.
- Increase your down payment. A larger down payment will result in reduced monthly expenses.
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