Getting a loan (“financing”) to buy a vehicle entails borrowing money from a bank or lender and paying the vehicle off monthly until you own it outright. Financing a vehicle also includes an initial down payment and interest on the loan amount.

Leasing essentially means you’re “renting” a car for a specified amount of time, says Forbes, with loan terms of usually 36 months or more. But whether buying or leasing is right for you depends on your personal needs, as there are pros and cons for each.

Pros of buying a car

Buying a car has higher monthly costs but you’ll at least own the vehicle once it’s paid off, explains Consumer Reports. And despite those higher costs, you stand to save more money in the long run, according to Edmunds.

Buying gives you the flexibility to sell the car whenever you want and, as mentioned above, you can use the car as a trade-in for a new one, which means you’d potentially recoup costs. You also likely won’t be subject to modification and mileage restrictions that often come with vehicle leases.

Plus, once you’ve paid off the car, you can drop certain auto insurance coverages required by your lender – like gap insurance.

Cons of buying a car

While financing a car may allow you to recoup the costs with a trade-in, remember that longer loan terms, which often come with financing, run the risk of negative equity. And attempting to solve the problem by pushing what you still owe on your old car toward a new loan means you’d be financing your old and new car simultaneously, warns Consumer Reports.

Additionally, owning a car isn’t like owning a house, a car depreciates in value over time, explains Edmunds. In which case, money on your vehicle wouldn’t go toward a savings asset, like a house, but would rather be tied up in repairs and ongoing maintenance costs.

Pros of leasing a car

Leasing is generally cheaper than financing because you’re not paying the car’s full price, says CNBC. And if you prefer to save on driving a higher-end vehicle, leasing may be the way to go, adds Forbes. Leasing typically has a lower sales tax, too.

Buying a leased vehicle may also be an option. You’d just need to check with the dealer if a lease buyout is allowed, Bankrate recommends. You might even be able to make money purchasing and re-selling your leased vehicle, adds Forbes.

Also, aficionados keen on many car-driving experiences easily change cars every couple of years, according to Edmunds. That’s due to the shorter loan terms that come with leasing and fewer trade-in hassles at the end of a lease.

Cons of leasing a car

Leasing has smaller monthly payments – but leasing costs more in the long run than purchasing a car and keeping it for years, according to Edmunds. There may also be high maintenance costs at the end of a lease.

Ownership may be an option at the end of a lease, depending on the lease contract. But understand how taxes around buying leased cars work in your state, advises Forbes. A dealership can be a good resource in that regard.

Much of the decision-making boils down to where your priorities lie. Buying is more expensive, but you’ll own the car outright at the end. A buyout with leasing needs to be explicitly stated in the contract. Maybe you prefer lower monthly payments – not to mention the option to switch cars every couple of years. Keep these things in mind when using the monthly car payment calculator. It may be the perfect starting point for your decision-making process.