Low-Cost Car Leasing: It's Back!

Drivers who like to lease confronted a drought of good deals during the depths of the recession. The financial crisis and the GM and Chrysler bankruptcies brought leasing from Detroit to a screeching halt. And leases from overseas automakers weren't the moneysavers normally associated with leasing. But with financing becoming more available, you can now find sweet low-payment lease deals without Gotcha! fine print. Even Toyota, which has rarely resorted to subsidized leases or 0 per cent financing, is now doing both to steer out of its recall mess. If you're dubious about Toyota, competitors have come up with tantalizing lease offers, too. Among them:
GM is offering its 2010 Buick Lacrosse sedan, a critics' favorite, at $359 a month for 39 months with $2,659 due at signing.
Ford's 2010 Escape, a small SUV, goes for $239 a month for 24 months with $3,433 due at signing.
Volvo's 2010 S40 (pictured here) leases for $315 a month with just $1,250 down payment at signing.
For a longer list of current deals, see the U.S. News compilation.

You might consider leasing if: you usually get a new car every three years or so, you take good care of your car and would avoid wear and tear penalties, and you hate the hassle of trading in or selling a car. If you drive a lot of miles annually (see below) or just like to hang on to a car after it's paid off, you're better off buying.

If you do want to lease, remember: low monthly payments don't necessarily mean a great deal. Before signing a lease contract, follow these four rules of the road:
Keep it short. Dealers trying to keep payments low may offer four-year or five-year leases. Don't go much beyond three years. Otherwise, interest charges can stack up and your lease may exceed the new-car warranty. If you need a longer lease to lower the payments, consider a lower-priced car.

Negotiate the selling cost. Lease payments are determined by the difference between the initial value (or capitalized cost) and the residual value - its estimated worth at the end of the lease. So negotiate that initial cost as if you were buying the car. To see how negotiating can lower costs, check out the Bankratecom. buy or lease calculator.
Keep the down payment low. Sure, a sizable down payment lowers monthly payments, but you've got better places for that money. A down payment in the neighborhood of the Ford Escape's $3,433 is about as high as you want to go.
Watch those mileage limits. Drive more miles than the amount in your lease contract and the penalties, at 15 to 20 cents per mile, really add up. So make sure you can live with the limits in your lease. The Buick Lacrosse lease, for instance, allows just 1,000 miles a month. If instead you drove 1,200 miles a month for a total of 46,800 instead of the 39,000 allowed, at 20 cents a mile penalty you would pay $1,560 at the end of the lease. So if you typically rack up more than 12,000 miles a year, drive on.