Leasing has exploded in popularity over the past few years, becoming one of the most common financing methods for obtaining a new car. What has fuelled this surge in leasing? The answer is a combination of two things: lower payments and lower up-front costs.

So should you lease or buy a car?
You have to evaluate the pros and cons of each option in regards to your economic resources. That way, you won't regret your decision.

With a lease
your monthly payments will almost always be lower than a conventional loan because you are paying for only a portion of the car's full value over the lease period. This gives you the option of driving a nicer car for the same monthly cost. Also, the sales taxes are spread over the term of lease. When you buy a car you have to pay them up front.

Disadvantages:

• Mileage limitations: you could end up paying excess miles at the end of the lease.
• Early termination liability: if you want to switch cars before your lease is up, most car dealers require the driver to pay all future payments at once. Since the car has not kept its value, the driver will be paying much more than the car is worth.
• Higher insurance requirements.

Tips for leasing
To make sure leasing a car is your best option, it's important to take in consideration:

• Capitalized cost reduction (what you have to pay up front).
• Security deposits, set up fee, service contracts.
• Monthly payments.
• Finance charges, rent charge, or interest rate.
• Excess mileage.
• Monthly sales or use taxes.
• Early cancellation fees.