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Buying or leasing a vehicle—which way to turn? Discover the point-by-point differences below.

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Buying:

  • Monthly payments are applied to the actual purchase of the vehicle. Once the car is paid off, you're free to do as you please with it. You can keep it for the next ten years or sell it. Buying allows you to keep the vehicle for as long or as short a period as you'd like.

  • Financing a vehicle usually requires a down payment. This can be in the form of cash or a trade-in.

  • Monthly payments are higher than monthly lease payments because they're based on the total cost of the vehicle, not just its depreciation.

  • A typical financing period is 48 to 72 months. After that, you own the vehicle outright with no more payments due.

  • Maintenance is totally voluntary. While you should always keep your vehicle maintained for optimal performance and resale, there are no set requirements as there are with leasing.

  • Because finance periods usually extend beyond the typical manufacturer warranty period, maintenance costs during a four- or five-year financing period will be higher than with a two- or three-year lease.

  • There are no predetermined mileage limits, but higher mileage still causes greater depreciation.

  • There are no limits to modifications you can perform on a financed vehicle. If you like fancy wheels, you're free to put them on.

Leasing:

  • Monthly payments are applied to the depreciation and use of the vehicle, not the actual purchase. At the end of the lease term, you can either return the vehicle or purchase it from the lessor.

  • Monthly lease payments for the same vehicle are lower than financing payments.

  • Leasing often does not require a down payment. But a down payment can be applied as a means of lowering monthly payments.

  • Leasing typically requires the replacement of the vehicle every two or three years. Once your lease is over, you'll need to buy the car or lease another right away.

  • Early termination of the lease typically requires coming up with a significant amount of cash. Once you're committed to a lease, you have to stay with it for the duration or come up with the money to terminate early. The early termination penalty varies from lease to lease and the method of calculating the amount is explained in the lease.

  • For some people, lease payments can seem endless. Once their current lease term is over, many simply start a new lease on another vehicle. Moving from one lease to another is convenient, but unless the lessee chooses to purchase the vehicle at lease-end, it often ties the lessee into a seemingly continuous cycle of leasing.

  • Leasing sets predetermined annual mileage limits, usually 15,000 miles per year. Additional miles can usually be purchased before the lease inception to increase the mileage limit.

    • Lease vehicles are usually covered under the factory warranty for the entire duration of the lease.

In the market for a new car? MSN Autos is pleased to provide you with information and services designed to save you time, money and hassle. Click to research prices and specifications on any new car on the market or click to get a free price quote through MSN Autos' New-Car Buying Service.