NEW YORK (MainStreet) — The prices dance in front of your eyes. Lease a new VW Jetta: $139 per month. A Subaru Legacy: $229. Even a BMW X1 is $289. Can this be real?

Indeed the prices are - as of August 31- but that does not mean the decision to buy or lease will be that fast or simple.

But chew on this: buy a stripped VW Jetta with $1,000 down, and the monthly payment on a five year note is $309. Does that have your attention?

The reality: leases can go spectacularly bad. They are not for everyone. But for the right driver, on the right car, they can produce terrific wins. Often, they will let a savvy driver have a new car every few years, at low monthly payments, and many leases even throw in routine maintenance. That is why smart drivers usually at least give leasing a look.

Car leases now account for more than 27% of new cars, up from 22% in 2012. The lure lies in the very appealing monthly payment.


Chris Coleman, co-founder of car buying site Carlypso, said that last year he leased a car for an incredible deal. He got a Fiat 500e - the electric version of the pint-sized car - at a jaw dropping $94 per month for 36 months with just $1,000 down. The same car now is yours to purchase at $463 month for 72 months. That’s with $3,278 down. “In some cases manufacturers heavily incentivize leases,” explained Coleman. “Fiat had a massive incentive on the lease, not the purchase.”

Check the big auto information websites. Most highlight lease deals of the month. The best deals - with the biggest built in incentives - are easy to find.

Often the best cars can be had with great leases, too, said Coleman. “BMW and Mercedes often offer good lease deals,” he said. That’s because both marques have vigorous used car programs and they want to keep the iron moving off the lot. Because they have a lot of control over the re-sale market, they have high comfort setting high lease “residual” prices - what the car should be worth at lease end, which is the magic number that determines lease pricing.

But then there are the leasing negatives.

Coleman went into this with eyes wide open to the pitfalls of leases. The big one - drive a lot (really exceed the 10,000 or so miles allotted annually), and you will pay a hefty mileage overage penalty when you turn the car in. Coleman figured - with a 100-mile driving range on the electric Fiat and his base in San Francisco - there was no way he was going to exceed his mileage cap.

The other drawback: “When you need to get out of a lease early, you can get killed,” said Coleman.

Scott Chesrown, a vice president at used car marketplace Vroom.com, added that when life circumstances change that often means a change in automobile. The sporty model goes in favor of an SUV when a baby enters the picture, for instance. “Millennials have to consider this,” he said.

Take a job offer that puts you in Manhattan and, guess what, that leased car is an albatross. But getting out of a lease is ugly.

Fact: there is no elegant, no low cost way to terminate a lease early. Maybe you can convince a pal to pick up the lease. But, really, face it. If you need to get out early, you will eat thousands of dollars in losses. If you are not stable in your location - and your lifestyle - forget about leasing.

Another lease drawback per Chesrown: “You don’t build equity.” True. At lease end, you hand over the car and the keys and you get nothing back.

But for many of us, increasingly, leasing makes sense.

Jordan Perch at DMV.com pinpointed the ideal lease customer.

“One typical situation when it makes sense to lease a car is if a consumer prefers driving first-generation vehicles that are equipped with the latest technology and change cars every few years," Perch said. "For those who want to drive late models on a regular basis, it is more reasonable to lease the car they are interested in than to purchase it, because leasing involves lower down payments, meaning lower upfront costs, which can help consumers save money in the long-term if they have decided to get a new car every 2-3 years.”

Bottomline: leasing definitely is not for all of us. But it is for an increasing number of us and the numbers tell why.

This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.