It can make more sense to lease a car, but beware of drawbacks.

Lease deals, in fact, may be better than they have ever been. But does that mean it's time for consumers to
cast away concerns about leasing vs. buying?

Many auto experts say no — and maybe.

A lease is always more expensive than an equivalent loan for most people most of the time, they are better
off purchasing a car. Serial leasers wind up having higher auto costs and less flexibility. If you own your car, you can
decide to stretch ownership until the wheels fall off.

Still, leasing is often attractive because of the low monthly payments when compared with purchases, especially
of luxury vehicles. Dealers and their finance companies can afford to offer these lower payments because consumers
are paying back only a portion of the car's total cost over the period of the lease, not the full amount.
The payments are based on the projected loss in value of the car during the lease period, plus finance charges,
fees and taxes, after first subtracting any upfront payments.

Despite getting burned when SUVs and other vehicles depreciated faster than they expected, finance companies
and dealers are back pushing leases as easy, cost-effective ways for cash-strapped consumers to get into a new vehicle.

And Reed notes that leases with low monthly payments and low "drive-off costs" can be a good deal because consumers
don't have to worry about their resale value as they would with a purchase.

Several factors argue against leasing for most people, or at least serve as cautionary notes:

Finance charges

Finance charges on a lease are always higher than on an equivalent loan for the same amount of money, same interest
and same term, because you are being charged interest on a larger average balance. You're always going to be paying
back less than you would if you were borrowing the money. The less you pay back, the more interest you are charged.

What you're left with

No matter how much it depreciates, after you've paid off your car loan, you have a car that you can keep or trade in.
After you've paid off your lease, you have to buy or lease another one.
(Or you can buy the one you leased, but that still costs more money.)

It's mind-boggling

The sea of numbers involved in leasing is enough to make a consumer glaze over and forget to ... negotiate.

Getting out

Even dying doesn't get you — or at least your estate — out of a lease contract. There are hefty early-termination fees
and penalties if you try to turn a leased vehicle in early. There is hope, however, if you wind up in a leased car you can
no longer afford — or simply grow tired of. Leasebusters.com provides a markets where you can sell or trade your lease,
perhaps for a less expensive one. 

The fine print

While the mileage requirements may vary, it's easy to drive far more — or less — than you thought you would when you
signed on the dotted line. Again, the penalties are daunting for the miles driven over the limit, which is often 20,000 Kms a year.
It can be up to 30 cents a mile over the limit and notes that most people drive 25,000 Km a year. Drive too little, and you will
have paid far more in depreciation than you used. It's also important to keep the vehicle in good condition, repair any
damage and maintain service records.

Downsides aside, leasing may still be for you if you like to replace vehicles every two to three years. That is, if you think trading
one in when you buy another is somehow too much of a hassle. There are no clear tax benefits to leasing over buying when it
comes to business usage, but many real estate agents, lawyers and other professionals still prefer leasing as a way to drive
a vehicle that better suits their image. Or at least the one they are trying to project, even if they can't truly afford it.

The best advice is to buy a car and drive it for six or seven years or until it becomes too expensive to repair.

Still, whether you are a well-heeled lawyer or a cash-strapped mom the "best trick in the world" if you want to drive a new
car every few years is to buy a car — with cash or a loan — sell the car after it's paid for, turn around and use the proceeds
of the sale as a down payment on a new car loan.

Then you have a leaselike payment without the heavy finance charge.

You won't spend as much money leasing a $36,000 car, but you will be making a better investment if you buy.
Lease payments			Loan payments
Monthly average	Over 36 months	How the finances on a $36,000 car stack up:	Monthly average	Over 36 months
$514	$18,500	Financed amount	$1,060	$38,160
$155	$5,592	Finance charges: 6.84%	$115	$4,157
$40	$1,445	Sales tax of 15%	(included in loan payment)
$0	$395	Lease disposal fee	$0	$0
$709	$25,932	Subtotal	$1,175	$42,317
-	$0	Vehicle value the consumer retains after 36 months	-	$18,000
-	$465	Net investment earnings at 2.45% avg. money market rate	-	$0
$709	$25,396	Total cost	$1,175	$24,317