• Is your car going to be used for business purposes?
• Are you comfortable making monthly payments?
• You want to try out a car before buying it.
• You want to always drive a car with warranty on it.

Financially leasing can make a lot of sense as generally cars depreciate in value. Ideally, you will want to buy things that appreciate in value – like real estate – and lease those that depreciate with the years – most cars.

Before making up your mind, it is important to be aware of the following:

#1. Mileage – Most car lease deals allow you only a certain number of miles per year – usually up to 10,000 miles. If you are going to do more than this, it may be adviceable to obtain an auto loan instead. The bottom line is that, with car leasing, you are just paying for the use of the car – the more you use it the more you pay and vice versa. Most finance companies are allow some flexibility but going over the statutory limit can cost you as much as 0.20 cents for each mile.

#2. Length of Car Lease - Car leases are notoriously difficult to get out of. With most minimum length being 24 months, it is imperative that you understand the fine print of your contract. Some companies may allow you to transfer the contract, you can find this out before approving the contract.

#3. What Happens When Car Lease Ends - There are several options when your car lease ends. You can buy the car at a pre-determined amount which is specified in the initial contract that you signed. This figure is dependent on the residual value of the car. Residual value is calculated on the amount of depreciation. The higher the residual value the more the car is worth after the lease. Usually for cars like these, the monthly payments tend to be lower which means the car will be worth more than the amount you owe.

#4. Wear And Tear – Although most auto dealers understand the concept of wear and tear, it is important that you keep the car in good driving condition. Any thing less can attract unnecesary charges. Missing parts, bumps are all in for a penalty when you drop it off.

#5. Putting Money Down - Making a deposit is recommended as it lowers your monthly payments but it’s best to put as little money down as should your terminate your auto lease contract you are likely to loose that initial payment. In the unlikely event of an accident, if your car is written off, the auto insurance provider will pay off what is necessary, then gap insurance and you may walk just paying your insurance deductible but the initial down payment is lost – forever -