Leased versus owned car insurance: A guide to what you need to know

According to Cox Automotive's data, approximately one out of every five motorists choose to lease their car instead of owning it.

A leased vehicle typically requires less money upfront and lower monthly payments compared to a financed vehicle, and it also comes with a bumper-to-bumper warranty, which means fewer repair expenses.

When leasing a car, it's important to understand the insurance requirements.

Find the best car insurance

The difference between leasing and buying a car

At the end of your lease term, you have the option to walk away, renew the lease, or pay for the residual value of the car through a lease buyout loan.

What type of insurance do I need for a leased car?

Gap insurance can make up that difference.

Insurance companies typically charge lower rates for gap insurance policies, according to the Insurance Information Institute (III).

How much is insurance on a leased car?

Does it cost more to insure a leased car?

Geico is a top choice for budget-conscious drivers, offering low rates and 16 discounts, including up to 22% off for good drivers who have gone five years without an accident.

Should I lease or buy a car?

Lease contracts typically come with an annual mileage allowance, typically ranging from 12,000 to 15,000 miles, with excess mileage incurring an average cost of $0.10 to $0.25 per mile. Leases are usually for three years or less, making them an appealing choice for those who want to drive a new car or avoid the maintenance problems that arise with older vehicles.

Shop for the best car loan

Bottom line

Meet our experts

Why trust CNBC Select?