Leasing has exploded in recent years, with individual consumers accounting for the bulk of the increase. With the average cost of vehicles rising each year, it is becoming more important to understand the options available for financing. Leasing has become a much more widespread option available to consumers through a number of different sources including automobile manufactures, local dealerships, financial institutions, and independent leasing companies.

Because of the variety of different leasing plans available, the amount of regulation of the leasing industry, and what can sometimes be a high stress situation of negotiating a price for a vehicle, consumers need to be well informed so they can make a decision that best fits their individual situation.

Leasing is not for everyone, and it is important for you to consider things like how long you like to keep your car, how many miles you drive your car each year, how much money you want to make available for an initial payment, and how you value ownership or equity of your car.

The basic principle of leasing is that you pay only for what you use of the vehicle. The most frequently cited advantages of leasing are that leasing requires a lower initial cash outlay, the monthly payments can be lower than a loan, and you can usually get more vehicle for your money. Common disadvantages are that at the end of the lease you don't own the car, and you may get charged for excess miles driven and excess wear and tear on the vehicle.

The basic principles of buying your car, either with cash outright or with a loan, is that you have or are building equity toward ownership. The main advantage is that you won the car after all the payments are made. The main disadvantage is that by the time you actually own the car, it may have cost you more than the car is worth.