When buying a car, the person owns it outright after fully paying for it, whereas leasing is more like paying to rent the car for a specified period of time, according to Investopedia. Although both can result in a new car, there are numerous benefits and drawbacks to both approaches.
The biggest advantage of buying a car is that it becomes the property of the owner once it is paid off. However, this is also a slight negative as well, as vehicles quickly lose value or depreciate over time. This means that the owner always ends up paying much more for the vehicle than she could ever sell it for, according to HowStuffWorks.
On the other hand, the lessee doesn't really have to deal with depreciation, as she never owns the car. Depreciation is figured into the total monthly lease payments, but even with this addition, Investopedia states that the payments on a lease are usually much lower than for those who are buying. All the same, it typically costs more to insure a leased vehicle than an owned one.
In addition to the lower payments, Investopedia also notes that leasing often allows a person to get a much nicer car than she could if she needed to get an auto loan to buy one. This is because, in addition to the lower monthly payments, most leases require little to no down payment or upfront sales tax payments.