Low-cost car lease offers tempt buyers

Manufacturers trying to lure customers to buy new cars in an uncertain economy increasingly are turning to a tried-and-true marketing effort -- low-cost leases.

With the average new car payment right around $500 a month, manufacturers are heavily advertising lease deals that run from about $175 to $250 a month on a wide range of vehicles.

In 2007, leases represented nearly 20 percent of all new vehicles sales. That percentage is expected to rise in 2008.

Here are some examples of lease deals now on the market:

2008 lease deals

Make/model Payment Term Down payment Mileage limit (yearly) Nissan Sentra 2.0S CVT sedan $179 24 $2,449 12,000 Honda Civic LX coupe $199 36 $1,999 12,000 Chrysler Town & Country Touring minivan $259 36 $2,499 10,500 Dodge Ram 1500 SLTY Quad Cab 4x4 pickup $249 27 $2,989 10,500 Honda Pilot VP sport utility vehicle $279 36 $2,999 12,000 Volkswagen's New Beetle 2.5 LS $249 36 $0 12,000

As always, anyone considering a lease needs to be cautious.

Many people become trapped when they underestimate how many miles they drive each year. Nationally, the average driver travels about 15,000 miles a year.

With lease overage charges averaging about 25 cents a mile, it is easy to come to the end of a lease and owe more than $2,000.

Manufacturers expect drivers to return leased cars in good condition, so a consumer can't ignore dings and dents. Also, consumers typically must have top-tier credit ratings to be eligible for most of the least expensive leases.

However, today's leases also provide a real opportunity for some people.

For example, in an effort to get consumers out of cars in which they find themselves "upside-down" -- meaning they owe more than the vehicle is worth -- some dealers and manufacturers are offering to roll over the negative equity into a lease.

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For example, say you owe $3,000 more than your current car is worth, and you're looking at leasing a car for $199 a month for 36 months. An additional $84 a month -- plus interest -- on that lease would pay off the negative equity. At the end of the lease, the consumer would be back to square one.

The consumer would have to turn the leased car back in, but wouldn't be in the hole on the vehicle -- something that may appeal to buyers now saddled with a conventional loan stretching well beyond five years.

There's little doubt that leasing can be a financial break for some people. But don't leap into a lease without making sure it's a good fit.

Here are this week's reader questions:

• Low-cost car lease offers tempt buyers • Can I ditch my car loan by leaving the U.S.? • Which steps can help me pay off my vehicle? • Will a dealer's woes allow me to escape my lease?

If you have a question for Terry, e-mail him at Driving for Dollars. Save money on your car -- sign up for Bankrate's new weekend Car & Money newsletter.