Think before you lease

NEW YORK (CNNMoney.com) -- The New York Auto Show is going on and is chock full of cool, sleek and innovative new cars. And if all that glitz and glamour is making you think about buying or leasing a new car, we're going to tell you what you need to know before you hit the dealership.

Leasing a car can be very appealing for several reasons: you generally don't have much of a down payment; the average down payment on a lease is $950, while a down payment on a car is about $2,400.

Your monthly payments will also be lower than if you took out a loan to purchase a car, plus, there won't be as many maintenance costs since most leased cars are under warranty for three years.

Bottom line here: if you don't hold onto your car more than 3 or 4 years, leasing is a good option, says Alex Rosten of Edmunds.com. That way you can take advantage of the low maintenance costs.

But while leasing may sound like a great option, there are some serious drawbacks.

In the long run, leasing a car is going to be more expensive than buying a car according to Edmunds.com. Remember, you're not building up any equity in your car. And once you start leasing, your payments continue.

And when you get to the end of the lease terms, you either have to begin leasing again, or buy the car.

If you're thinking about leasing, you'll also want to do some calculations.

First, figure out what the cost to own that car would be over a five-year period. You can do this by going to Edmunds.com and clicking on their True Cost To Own calculator, which will take into account depreciation, estimated maintenance costs, fuel costs, insurance premiums and taxes.

If you want to find out what your lease payment will be, use the lease payment calculator on Edmunds Web site.

If you do decide to lease, there are some fees that you should know about.

There is an initial acquisition fee for each vehicle you lease. This is basically a flat fee paid to the bank or the financing company and it generally runs about $600.

If you decide not to buy the car at the end of your lease, you'll have to pay a disposition fee, which runs about $300 to $400. Remember, every time you lease a car, you'll have to pay both of these fees.

And of course, whether you buy or lease a car, there are document fees, registration and title fees that you have to pay.

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