Is it better to buy or lease a car?

Cars are one of the few large purchases a person can make in their lifetime. With soaring average costs that are hovering around $37,000 for a new vehicle and $23,000 for a used one, is it better to buy or lease a car?

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It turns out, there are pros and cons to both financial decisions, according to auto industry insiders and personal finance pros. Here is a quick and easy list of considerations FOX Business collected from CARiD Product Training Director Richard Reina and Bankrate Senior Economic Analyst Mark Hamrick.

What do you need to know about buying?

The pros

"The biggest pro to buying a vehicle is, of course, the lack of mileage limitations," Reina said. "If you are driving more than 12,000 miles each year, it's a much better option. Also, once it's paid off, it's yours. Today's modern cars, when maintained properly, are lasting for an average of 12 years, making the purchase a better investment over time, if it fits into your long-term plan."

The cons

Conversely, Reina said: "One con to buying is higher monthly costs." Though, he noted that it's important to "assess your budget compared to the monthly cost" to avoid this from happening.

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What do you need to know about leasing?

The pros

"For leasing, the biggest pro is the fact that you will pay a lower monthly cost and save on overall costs if you’re not planning to keep the vehicle for a long period of time,” Reina said, so long as you don’t go over the set mileage amount.

"Most leases also come with a warranty which will last for the duration of the agreement as well as a maintenance package," he noted.

Another perk of leasing is the opportunity to test out the "latest and greatest features" of new cars without the pressure of commitment. Swapping out cars for a newer model every few years is much easier to do when a lease has run out compared to selling an old car you own for a new one.

"For some consumers whose priority is keeping their monthly car payments within a tight budget, leasing may be a better option," Hamrick pointed out.

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The cons

"A major con of leasing is the mileage limitation. If you do a lot of driving, this could be an issue. You will also always have a monthly payment to make on the vehicle and won’t build up any equity," Reina said, which isn't great for long-distance commuters and road trippers.

"While a 'low-mileage lease' that’s being advertised seems like an attractive offer, you need to look at the cost of the down payment and any applicable interest rates," he added. "Another possible con comes in the form of interest rates. If you aren't careful reading the terms and conditions, what seems like an awesome monthly price could actually result in you paying more than the car is worth due to interest rates."

Another major negative is that early termination of a lease or mileage violation can have costly consequences, according to Hamrick.

Both Reina and Hamrick agreed that lack of ownership is a significant con because it hinders equity building.

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With regard to rising automobile costs, Hamrick made a case for consumers who are considering a used car.

"The benefits of buying used are numerous assuming that one has a strong assurance that the vehicle is mechanically in good shape," he said. A vehicle that's only a few years old will typically be substantially less expensive than a new car."

The savings earned from purchasing a used car are well worth it, according to Hamrick, regardless of whether the transaction was done with a loan or cash. Though, if a person is financing a used vehicle, he doesn’t advise the length go beyond four years.

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"It will be paid off sooner and there's less likelihood that one is underwater on the loan," he said. "That means that the loan costs more than the car itself is valued."