easing - rather than financing or paying cash - has become a popular method of acquiring a new car or truck. In fact, about three out of 10 new vehicles leave the showroom under a lease. And when it comes to luxury cars, approximately 58 percent are leased, according to research done by auto analysts J.D. Power and Associates.

It's hard to shop for a car these days without being tempted by promises of "zero down" and low monthly payments on two- or three-year leases. It sounds great, but what is it really all about?

Leasing is paying for the use of a car, rather than actually paying for the car itself. The bottom line is that your lease payments cover the cost of the vehicle's depreciation over the length of the term of the lease instead of the vehicle's actual purchase price. You (the "lessee") are expected to maintain the car during the lease, but when the lease is over you can either return the car or exercise the option to purchase it. Conceptually, that's how it works. But in practice, there are a number of factors to consider before you decide whether or not leasing is appropriate for you.

Leasing isn't for everyone, but for those willing to work within certain limits, leasing offers an attractive and affordable means of driving a new car every few years. If you're interested in leasing, you should make sure you're comfortable with some of the basic aspects of leasing over buying. Ask yourself the questions below and see how you fit.

If you answered "no" to the questions about a mileage limit, and "yes" to two or more of the others, then leasing may be right for you.

There are many differences between leasing and buying, but the primary difference is that with buying you're paying to own the car and with leasing you're paying to use the car. Below are some specific differences between buying and leasing a new vehicle.

It may sound like a dream, but leasing makes it possible. Since the amount a vehicle depreciates over a two- or three-year lease is less than the cost to finance that vehicle over the same time period, monthly lease payments can be less - and considerably so in many cases. This allows consumers to use the money they save for other things, or to lease a more expensive vehicle than they could normally afford to finance for the same monthly payment. To arrive at this monthly lease payment, a leasing institution (the "lessor") combines the vehicle's estimated depreciation over the lease period with the interest being paid by the lessor to finance the car, plus assorted dealer fees.

Most leases can be initiated without a down payment (known as a "capitalized cost reduction," in leasing terms). Again, because lease payments are based on a smaller amount than if the vehicle were financed, less money is needed up front to initiate a lease. A down payment may be utilized in some instances to lower monthly payments to an especially attractive figure; however, this contradicts one of the main benefits of leasing, which is getting a new car with little money down.

The short lease periods currently available are very attractive to consumers who like the idea of driving a new car every two or three years. It also helps keep maintenance costs down. Since most manufacturer warranties cover vehicles for at least the first two or three years - with the exception of required routine servicing - most serious maintenance costs get absorbed by the manufacturer anyway. But beware: those who may be thinking of terminating a lease early should think twice since there are severe penalties for early lease termination.

At the end of the lease, you have the option of either returning the vehicle to the lessor or purchasing it. If you choose to return it, some basic requirements must be met: 1) The vehicle must be in good shape (as determined by the lessor) and free of excessive wear and tear. Any evidence of rough or abusive treatment will result in repair costs being charged back to you. 2) The vehicle must be returned as delivered. No performance modifications or aftermarket parts and accessories are permitted. 3) Total mileage must not exceed the annual mileage cap set by the lease. If the vehicle has more miles than the leasing agreement stipulates (the normal mileage cap is usually 15,000 miles per year), you may be charged anywhere from 10 to 15 cents per mile for miles over the mileage cap. It pays to stay within the mileage limits.

If you choose to purchase the vehicle at the end of the lease, another set of factors must be considered, foremost of which is the vehicle's lease-end value, or residual value. With the more common closed-end lease, the residual value is actually calculated at the lease's inception. This ensures that you pay a predetermined amount regardless of the vehicle's actual market value. If the market value is higher than the residual value, then you're getting a good deal. If the residual value is less than the market value, the lessor absorbs the loss, not you. Regardless of market value, you pay the same.

While a closed-end lease leaves the lessor responsible for the vehicle's lease-end value, an open-end lease holds the consumer responsible for any difference between the vehicle's residual value and its actual market value at lease end. This type of lease leaves you more vulnerable to unpredictable market values and could end up costing more money. If the market value is less than the residual value, you'll have to pay that difference to purchase the vehicle. Seldom does an open-end lease result in you profiting from the arrangement.

Leasing may sound straightforward, but that's not necessarily the case. Here's some advice that will help make leasing your next vehicle a little less mysterious and intimidating: