auto

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/modelPaymentTermDown paymentMileage limit (yearly)
Nissan Sentra 2.0S CVT sedan$17924$2,44612,000
Honda Civic LX coupe$19936$1,99912,000
Chrysler Town & Country Touring minivan$25936$2,49910,500
Dodge Ram 1500 SLTY Quad Cab 4x4 pickup$24927$2,98910,500
Honda Pilot VP sport utility vehicle$27936$2,99912,000
Volkswagen's New Beetle 2.5 LS$24936$012,000

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.

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.

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