Leasing a car or truck (instead of buying one) has become very popular in recent years. Leasing a car is just like renting. The car belongs to someone else (the leasing company), and you make monthly payments to use it. At the end of the lease term, you must return the car to the leasing company. Often the monthly payment for an auto lease is lower than the monthly payment for an automobile loan because you are only paying for a portion of the car's full value over the lease period. However, at the end of the lease period, when you return the car, you will have no equity and nothing to show for the payments you have made.

If you are trying to decide whether to lease or buy an automobile, consider these points:

Pros

• Since the monthly payment for an auto lease is often lower than a loan payment for the same car, you could afford to drive a nicer car for the same monthly cost. Or you could put that extra cash into a savings account.
• Upfront costs for an auto lease, including your security deposit, fees and taxes, are much less than the down payment and sales taxes required when you purchase an automobile.

Cons

• If you need to terminate your auto lease before the end of the lease period, you will probably pay significant fees for early termination. These fees could reach thousands of dollars. Be sure to read the fine print on the lease contract to determine your responsibility if the lease is terminated early.
• Leasing companies sometimes require higher amounts of insurance coverage than you would normally carry. Before signing your lease, get an estimate from your insurance company for the cost of extra coverage.
• Many lease companies charge extra fees for mileage exceeding a certain limit per year. These fees are in addition to your monthly lease payment, so consider how much you drive before deciding whether to buy or lease.