In recent years, the option of leasing over buying a car has picked up some serious steam. For many people, whether for personal or monetary reasons, the advantages of not paying an arm and a leg to own a new or used car far outweigh the downside of never being able to claim ownership. Despite the increasing commonness of leasing these days, however, there are still issues surrounding the option, which many people still don’t fully understand.

The decision to lease a car generally is driven by one of two reasons. Often, people with financial shortcomings are incapable of buying a car, in which case leasing provides a relatively cheap alternative and gets you behind the wheel. Others may have the resources, but simply want to drive a new car for a certain period of time. Whatever your reasons, there are several things you should know about what goes along with leasing a car and what issues might come up during the leasing process.

With respect to leasing a used car, probably the major advantage over leasing a new car is the substantial depreciation that occurs in the new car’s first year. At the same time, used cars carry some unwanted baggage -- problems that often aren’t covered by warranty -- that make this an unpopular option.

Most leases these days are closed-end, as opposed to open-end. An open-end lease means the car probably will be sold at the end of the term, and you will have to pay the difference between the car’s market price and the previously agreed-upon figure of what the car would be worth at the end of the lease term (residual). Most people prefer a closed-end lease, because they leave you, the lessee, free of the obligation to buy the car or pay the leasing company anything outside of wear and tear fees, or other agreed-upon charges.

The cap reduction fee refers to the amount paid before driving the car home, and because the residual is determined ahead of time, it is advised you pay as much as you can up front. The more you pay up front, the lower the monthly payments and other costs. Also, you probably shouldn’t take those "No Down Payment" ads too literally. In reality, you’re not going to drive away from a lot without paying something up front. While leases generally do not involve a down payment, per se, they do usually include other fees, such as cap reduction cost and taxes.

If you are wondering whether or not to trade in your current car when leasing a new one, the answer depends on a number of factors. First, trade-ins generally do not get you top dollar for your car, but this does save you the trouble involved with selling the car yourself. Remember, however, not to tell the dealer that you are planning to trade in your car until after lease negotiations are finalized, as the dollar amount of the trade easily can get lost in the negotiations shuffle. Last, before you trade in your current car, be sure to check its Kelley Blue Book value.

You can give your leased car back any time you want, but expect to pay dearly for it. Usually, in such a case, you are obligated to pay the remaining payments. If you get in an accident with a leased car, your situation is not much different than if you owned the car. Just as when you buy a car, you, as a lessee, need to have adequate insurance. As always, problems can occur when there are discrepancies between what the insurance company thinks the car is worth and what the lease says it is worth. Note that when you lease a car, check with your insurance company first, as many leases require that a person have more insurance coverage than other drivers do.

The fundamental question associated with the issue of leasing a car involves who actually owns the car. Essentially, neither the lessee nor the dealer owns the car. While the leasing company actually holds the pink slip, you own the car in nearly every other sense of the word.