As car prices continue to rise, many car buyers are being seduced by the heavily advertised low monthly lease payments. Don't be deceived—in general, leasing costs more than buying outright or financing. When you pay cash or finance a car, you own an asset; leasing leaves you with nothing except all the headaches and responsibilities of ownership with noneof the benefits. In addition, leased cars are often not covered by lemon laws. When you lease you pay a monthly fee for a pre-determined time in exchange for the use of a car. However, you also pay for maintenance, insurance, and repairs as if you owned the car. Finally, when it comestime to turn in the car, it has to be in top shape—otherwise, you'll have to pay for repairs or bodywork.

Find out how much you are required to pay at delivery. Most leases require at least the first month's payment. Others have a security deposit, registration fees, or other "hidden"costs. When shopping around, make sure price quotes include security deposit and taxes—sales tax, monthly use tax, or gross receipt tax. Ask how the length of the lease affects your monthly cost.

Find out how the lease price was determined. Lease prices are generally based on the manufacturer's suggested retail price, less the predetermined residual value. The best values are cars with a high expected residual value. To protect themselves, lessors tend to underestimate residual value, but you can do little about this estimate.

Find out the annual mileage limit. Don't accept a contract with a lower limit than you need. Most standard contracts allow 15,000 to 18,000 miles per year. If you go under the allowance one year, you can go over it the next. Watch out for Excess Mileage fees. If you go over, you'll get charged per mile.

Avoid "capitalized cost reduction" or "equity leases." Here the lessor offers to lower the monthly payment by asking you for more money up front- in other words, a down payment.

Ask about early termination. Between 30 and 40 per-cent of two-year leases are terminated early, and 40-60 percent of four-year leases are terminated early—this means expensive early termination fees. If you terminate the lease before it is up, what are the financial penalties? Typically, they are very high, so watch out. Ask the dealer exactly what you would owe at the end of each year if you wanted out of the lease. Remember, if your car is stolen, the lease will typically be terminated. While your insurance should cover the value of the car, you still may owe additional amounts per your lease contract.

Avoid maintenance contracts. Getting work done privately is cheaper in the long run—and don't forget, this is a new car with a standard warranty.

Arrange for your own insurance. By shopping around,you can generally find less expensive insurance than what's offered by the lessor.

Ask how quickly you can expect delivery. If your agent can't deliver in a reasonable time, maybe he or she can't meet the price quoted.

Retain your option to buy the car at the end of the leaseat a predetermined price. The price should equal the residual value; if it is more, then the lessor is trying to make an additional profit. Regardless of how the end-of-lease value is determined, if you want the car, make an offer based on the current"Blue Book" value of the car at the end of the lease.

Residual Value is the value of your car at the end of the lease.

Here's what First National Lease Systems' Automotive Lease Guide estimates the resid-ual values for a few 2001 cars will be after four years:

Acura TL 51%

Chevy Lumina 32%

Dodge Caravan 39%

Ford F-Series 36%

Honda Accord 48%

Jeep Grand Cherokee 44%

Nissan Altima 38%

Oldsmobile Intrigue 35%

Pontiac Grand Am 36%

Subaru Legacy 44%

Toyota Camry 43%

' First 3 years of 5-year loan with 8% annual percentage rate

2 Two 3-year leases.

3 5-year loan with 8% annual percentage rate, no monthly payments in 6th year.

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