Leasing has made driving a new car affordable for many who would otherwise be unable to get behind the wheel of a new vehicle. Lower monthly payments with little or no money down look attractive when compared to the conventional car purchase, but who comes out ahead in the end? Before we run the numbers a few words about price and residual value. The price of the leased vehicle should be negotiated just as it would be with a purchase. Remember, your lease payments are based on the difference between the agreed upon price of the car when new and its residual, or resale value at the end of the lease. In essence, you are paying for the depreciation of the vehicle.

Keep your lease term short - 3 years or less is best.

Don't violate mileage restrictions. You will pay a hefty penalty for each mile over the limit.

Compare residual values and financing among dealers.

Lease a vehicle that holds its value well - its higher residual value will earn a lower lease payment.