Most consumers understand the buying process. Leasing, however, can be a bit murkier. Before we talk about the benefits of leasing, let's review how it works.

Lessees are paying for two things in any lease deal: the car's depreciation and the cost of money. Depreciation is merely the difference between the car's capitalized cost and its residual value. The capitalized cost is made up of the negotiated purchase price and whatever other taxes and fees you elect to fold into the lease, while the residual value is the vehicle's predicted wholesale value at the end of the lease term. Residuals are a key determinant of your monthly payment. Higher residuals mean lower payments, but they also mean the car will be more expensive if you elect to buy it at the end of the lease.
In buying, the "cost of money" is known as "interest," which isn't applicable in leasing because no money is borrowed. Instead, consumers pay a money factor ? consider it a rental charge that allows lessors to make a profit.
Those are the basics. Now, what are the benefits?
Leasing Benefit No. 1: Driving a New Car
Leasing allows consumers to always have a new or late-model car in the driveway. This has some obvious benefits, including the ability to keep up with the industry's hottest vehicles and trends. This may not be the most prudent reason to buy a car, but leasing is often a lifestyle choice rather than a financial one.
These same drivers benefit from having the latest safety technology, such as side curtain-type airbags or an electronic stability system. Plus, newer cars have the latest creature comforts such as an OnStar communication system, advanced stereo equipment or DVD entertainment systems. Technology advances faster than a typical loan term.
Another benefit of driving a late-model car is fewer repair bills. If you're leasing to avoid future haggling with your mechanic, make sure the lease term is shorter than or equal to the car's bumper-to-bumper warranty.
Leasing Benefit No. 2: Cash Flow
Leases are attractive to many car buyers because they can get more car for a lower monthly payment. How's that possible? Lessees only pay for the depreciation on the car, not the entire vehicle. In effect, they're renting the car for the length of the lease.

Leasing also reduces your initial cash outlay. This allows for a more intelligent use of cash rather than putting it toward the questionable investment of car ownership. A car is a depreciating asset,  Why do I want to own it? To illustrate his point picture a scenario in which a real estate agent pitched a house that would be worth half its sale price in five years. You'd laugh.
There are other financial advantages in leasing. If you use your car for your job, leasing payments can be written off as a business expense on your tax returns. Additionally, lease obligations don't show up as debt on a credit report, which may be important to companies that buy multiple cars for business use.
Leasing Benefit No. 3: Subvented Lease Deals
More automakers are starting to offer incentives on leasing rather than big cash-back offers to those who buy. Such leasing incentives are called lease subvention.
"The cycle of leasing is really driven by two things: manufacturer advertising and subvention [subsidies],"
Manufacturers subsidize, or "subvent," leases to find customers who will buy slow-selling models. Today, about 50 percent of leases are subvented, compared with 28 percent in 2004.
For automakers, 2008 has turned into a hard year as sales of large SUVs and pickup trucks plummet, pushing down the residuals or expected value of these assets that automakers rely on to decide leasing terms. These factors will most likely reduce subvention in the near future, until automakers can sort out where the market is going. Subvention was crazy in the earlier 2000s and subvention will be pulled back [to become] more inline with market values.
As automakers shut down or retool SUV and pickup factories to build cars people demand, subvention will slowly decrease as well. Automakers offer subvention deals because they're in the business of putting cars on the street. They're just trying to get you into the car. They get hit at the end when the lease comes due. That philosophy of "move units now, pay later" is directly to the consumer's benefit.
Leasing Benefit No. 4: Avoiding Negative Equity
Even with today's incentives, many buyers are signing up for car loans of six and seven years. At that rate, the car will depreciate much faster than equity builds. In the industry, these purchasers are known as being "upside down.
"The negative-equity person also [has] a higher interest rate, a longer loan, higher monthly payments and a lower down payment.
To Buy or to Lease?
So, you're considering leasing your next vehicle.
Sure, approximately 80 percent of auto consumers either pay cash or finance their purchase with a loan, but you're considering joining the other one-fifth of intrepid consumers willing to forgo ownership for a new set of wheels and the short-term benefits that leasing provides.
Maybe you're self-employed and can write off your leasing payment as a business expense. Or maybe you're trying to get into a luxury model for less upfront cash. Or maybe you demand the latest safety and technology innovations and don't want to be saddled with a 60-month loan term. Or maybe you just like driving a new car every couple years.
"The question you have to ask yourself is, 'Is there a special reason I need a new car every few years?  Maybe your answer is yes.
It's true that leasing has diminished in popularity as automakers have offered low-interest financing and cash-back offers to buyers. Leasing rates dropped from about 29 percent of retail car sales in January 2001 to around 21 percent in 2008.
But as automakers try to stem depreciation caused by falling residuals ? the future value of a good ? automakers have begun to readjust their leasing programs. Chrysler Financial will discontinue offering new lease products in the United States, effective Aug 1, 2008. GM has also dramatically cut back on its leasing incentives.
As residuals are readjusted, so will the cost of leasing a vehicle. Affordability is clearly the key. When interest rates are low, lease payments aren't that much lower than financing. But when rates start going up, leasing will become more popular again.
Lower payments and higher interest rates aren't the only reasons to lease ? leasing also offers purchasing flexibility.
Lessees also don't have to worry about owning a depreciating asset ? as the automakers know all to well ? or dealing with hefty repair bills. At the end of the lease term ? assuming they've kept the car in good condition and stayed within prescribed mileage limits ? they can simply turn in the car and walk away.
 You don't want to worry about maintenance bills when your payments are up. You drive your car for business. You have good credit. Or you simply love having the latest set of wheels.
Questions or concerns about leasing? We can help! A lease allows you to pay for only the part of the car you use. At lease end you have first option to buy the car for a guaranteed pre-set value or you may just turn the car in and walk away. The advantages to leasing are the availability to have a low monthly payment while driving a car during the factory warranty period. This helps many people to both get into a car that normally is not in their budget while being covered for major repairs. Leases are flexible as to term, initial monies out of pocket and mileage allowed. We can tailor fit a lease to fit your needs.

"If it appreciates buy it; if it depreciates lease it" - ORC