Lease or buy? Tough market complicates choice

The decision-making process on whether to lease or buy a car has been altered by automakers' scaling back their leasing operations under pressure from high gas prices, making leases less available and much more expensive in many cases.

With companies' leasing subsidies gone, Art Spinella of CNW Marketing Research predicts that many of the 3 million people whose leases expire this year will be "encouraged or forced to buy their next vehicle instead of lease it."

Here are some points to consider about leasing:

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PROS

- NEW CAR FREQUENTLY: You won't have to drive the car for more than two to four years, depending on the length of the lease (36 months is typical).

- NO MONEY DOWN: Leases require little or no down payment, although you can make one in order to lower your monthly bill.

- LOWER PAYMENTS: You can drive a more expensive car for a lower monthly payment than if you'd bought it, albeit without gaining ownership equity.

- MINIMAL REPAIR RISKS: A leased car is always under warranty, with routine maintenance sometimes covered.

- NO RESALE ISSUES: You don't have to take on the risk of declining resale value; you just turn it in when your contract is up.

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CONS:

- FAST-RISING LEASE COSTS: Leases for SUVs, trucks and other non-fuel-efficient vehicles are getting significantly more expensive and will become harder to find as carmakers scale down their leasing businesses.

- CREDIT RESTRICTIONS: Credit requirements have tightened, because banks are reluctant to take on any more risk than necessary for fear the residual value will drop and they'll lose money. A spotty credit rating could make a consumer ineligible for a lease, or raise the cost.

- MILEAGE LIMITS: You'll have to pay for any additional mileage beyond the limits specified in the lease.

- LONG-TERM LOSER: Buying saves money compared to leasing over the longer term, especially after the car is paid off.

- RETURN FEES: The fee charged at the end of a lease can be high, depending on the contract and the company. This comes on top of the contractual monthly payments.

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CALCULATORS:

Consumers can go to Web sites such as http://www.leaseguide.com, http://www.cars.com and http://www.edmunds.com to compare leasing versus buying on various vehicles not only payments but total costs.