When it comes to leasing or buying a car, each choice has its own merits and detractions. One choice is not necessarily better than the other; however, it pays to know just where the differences lie: 

• Ownership. A lease agreement is an agreement to rent the car long-term, as opposed to just buying it outright. The real car owner is the car dealer. For the privilege of driving the real car owner's car, you pay monthly payments to the dealership. Leases run from 2-5 years, generally, and when they end, the car is returned to the dealer. In comparison, if you buy the car, but on installment payments, then you get to own the car once your final installment payment is made (in other words, you obtain the title of ownership with your last payment).

• Damage. If you own your own car, damages are your concern and are repaired at cost to you or to your insurance. If you lease a car, any damage to the vehicle outside of normal wear and tear will be charged back to you. Your choice of repair shops is limited to those of the car dealer's choosing.

• Monthly payments. A leased car requires less money per monthly payment than a purchased car. This is primarily because the dealership is the actual owner of the leased car, not you. You may have the option of purchasing a leased car at the end of its term, but the cost may be higher than you anticipated. Added in with your monthly lease payments, the total amount paid to purchase a leased car may be more than the cost of the car originally.

• Mileage. Leased cars typically have a limit on the number of miles that can be driven per year. Driving in excess of those set miles means that you will be paying a per mile fee when you finally return the vehicle to the dealership. The fees typically run $0.10-$0.15 per mile exceeded. Obviously, if your purchased the car, you would have no mileage restrictions.

• Insurance premiums. Car insurance costs more money if the car is leased rather than owned. You may also need to pay something called "gap" insurance. This "gap insurance" covers the difference between what an ordinary insurance payout would be for a "total" loss versus what an insurance payout would be for a "total" loss paid to the dealership.

In conclusion, when deciding between leasing and buying a car, consider your financial, life, and travel circumstances first. This way, you can decide which option is best suited for your needs.