Leasing has become an increasingly popular way for consumers to obtain a new vehicle. Besides not having to worry about the depreciation of you vehicle, the cost of leasing can be significantly lower than buying a new vehicle on credit.

Great benefits of leasing
You simply pay for the depreciation and the cost of money plus sales tax instead of paying for the total value financed. The payment when you lease is often times significantly cheaper.

If you own your own business or work for yourself, you can write off the entire yearly cost of leasing, or that portion applicable to your work.  For those who always want a new car in the driveway, leasing is probably a more economical option than constantly buying new cars - and suffering the costs of depreciation - on credit.  While the car is under lease, you will enjoy the same warranty protection a new car owner does and at the end of the lease, you will have the option of buying the car at its current market value.  You can avoid tying up a large sum of money in your vehicle, leaving you free to invest or spend that cash elsewhere.

Leasing is not all wine and roses though, and you should be aware of the downside.  For one thing, once the lease ends, that's the end of it. Since you have not built up any equity, as soon as the lease is up, you hand over the keys and kiss the vehicle goodbye, along with whatever money you put down.  As well, maintenance guidelines are often very strict. In some cases, you may even need permission from the leasing company to take the car out of the country.  Another disadvantage is that if you terminate the lease before the agreed-upon date, you may be liable to pay a substantial charge.

Types of leases:
* If you negotiate a closed-end lease you will pay a set number of payments over the duration of the lease. At the end, you will not have to pay any additional fees except those covering any damage the vehicle may have sustained during the lease term.
* In an open-end lease , you will pay the set payments, plus an additional cost representing the difference between the vehicle's actual market value and the expected value of the vehicle, as stated in the lease. The benefit of an open-end lease is that if the vehicle is worth more than its projected value at the end of the lease term, you are entitled to the difference. In this case, the dealer pays you.

If you've read about the pros and cons and are still keen on leasing, here are the steps you should take.

• Select the model, color and make of car you want to lease.
• Negotiate a fair price for the vehicle and get a lease agreement in writing. In all cases, the lease must be arranged through the car dealership.
• Make sure you take the lease home to study it before you sign. You may also decide to have a lawyer look it over. Make sure there are no loopholes that you're missing. They could end up costing you a lot of money.
• When leasing a car, the dealer is required by law to show you a disclosure form that lists the actual amount that they paid for the car. Compare this amount - which will appear on the form as the gross capitalized cost - with the amount shown on the lease.
• Note price differences and take a good look at what costs have been added. Don't be shy about asking the salesperson to explain any costs you don't understand.

The warranty will cover malfunctions but you are responsible for any non-manufacturing related repairs, as well as regular maintenance items such as oil changes. Remember that maintenance guidelines are usually quite strict.