Down Payment

• When you buy a car, in most cases you pay some money for the car upfront--your down payment. With leased cars, you may put money down on the car, but many times the lease does not require it. This is an added attraction of a lease; however, it is not a good thing if you want to trade in the car. You owe the entire balance on the car, and it may not be worth what you owe on it. You still may be able to trade it in but you will be upside down in your new car payment.
  
  

Terms

• Lease contracts vary, so before you get started make sure you understand the terms. Many leases allow you to return the car and walk away when the lease is up, but you may owe money if you choose this option.
  For example, if there is a clause in your lease that you can only drive 10,000 miles per year, and you have the lease for two years and drive 25,000 miles, you will owe mileage if you turn the car in and walk away.
  Another option is to purchase the car outright when the lease term is up. With this option, you pay the residual value of the car and, unless the lease dealer is willing to finance the car, will need to find your own financing.
  Still another option is to trade the car in for another car when the present lease term is up. With this option, you trade your leased car for another leased car. There may be no change in the lease terms but your payments may change, up or down depending on the value of the new car you choose.
  
  Look at the terms the company is offering before leasing a car to make sure the deal you get is right for you. If you do decide to trade the leased car, consider whether buying a car or continuing a lease makes financial sense for your situation.