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Three years ago, faced with two young kids at home and the need to replace her stolen minivan, Jennifer White took the path of least resistance and now regrets it — she signed up to lease an identical minivan for another four years.

"It was a very rash decision," says White, adding that she's "sick of the vehicle and I'm stuck with it. It's the exact same thing I had before, so I've essentially been driving the same vehicle for, I don't know, six years.

"And we're at a stage in life where we do not need a minivan any more. So I'm literally just counting the minutes until I can get rid of this thing."

On top of that, White's aging minivan is starting to cost her money in expensive maintenance items such as new tires.

Plus, since moving from downtown Windsor to the suburbs, she's been racking up the kilometres. By exceeding the kilometre limit on her leasing agreement, she is spending extra cash to the tune of 12 cents a kilometre. And when she returns the van, if the leasing company deems there has been damage or excess wear and tear, she'll be on the hook for more charges there, too.

"So I've been anticipating writing a cheque for over $3,000 just for the virtue of saying good-bye to my vehicle. I'm aware of it; we're planning for it. But it's kind of, like, for the cost of my lease payment plus what I am putting aside every month for those kilometres, I could be driving something a lot nicer."

White's experience stands as a cautionary tale for anyone planning to lease a new vehicle. It's a story worth hearing for one of every two new-vehicle buyers in Canada right now.

According to the Power Information Network, a division of market research firm J.D. Power and Associates, today 50 per cent of all new vehicle transactions in Canada are leases, up from about 40 per cent at the same time last year.

DesRosiers Automotive Consultants has found a similar trend. In 2005, 45 per cent of all new-vehicle transactions were leases, up from 39.5 per cent in 2004.

Both researchers say leasing is making a dramatic comeback. Back in 2001, just 27 per cent of buyers leased their new vehicle — and 59 per cent financed their vehicle with a loan. Since then, the number of people leasing has been rising steadily and now it is in the realm of the all-time high for leasing: 1997, when DesRosiers says 46.8 per cent of all new-vehicle transactions were on a lease. The steady uptick in interest rates largely explains the recent leasing boom.

"With leasing, the monthly payment is way lower," says J.D. Power's Rohan Lobo. "And that's why there is more of a focus on retail leasing."

According to J.D. Power's recent Dealer Satisfaction Study, 40 per cent of car dealers in Canada say retail leasing has become their most important finance area of business, up from 32 per cent last year. So dealers are putting much more effort into the leasing side of the business because Canadians are saying they are zoned in on keeping their monthly payment as small as possible.

"Retail leasing is pretty much top of mind for dealers today," says Logo, who manages Power's syndicated research. He adds that "rising interest rates have pushed the cost of vehicle ownership up, and dealers have turned to leasing as a more affordable way to get consumers into new vehicles."

Auto consultant Dennis DesRosiers agrees that rising interest rates are a factor in the increase in leasing, but he also believes that the heavy taxes and fees consumers face in Canada are pushing more and more consumers into a lease.

DesRosiers says that consumers typically pay 20-22 per cent in additional taxes and fees above the sticker price. The Goods and Services Tax, provincial sales tax in all provinces but Alberta, tires taxes, battery taxes, air-conditioning taxes, gas-guzzler taxes, registration fees and the like mean that Canadian car buyers are the most heavily taxed automotive consumers in the world.

"There is a serious affordability issue in Canada and consumers are making up for it with leasing," he says.

That's bad news for many consumers, say DesRosiers and others who have studied the pros and cons. Leasing is probably not the best financial solution for a lot of Canadians. Over the long term, the person who leases will pay more to drive than the person who makes an outright purchase.

Leasing, of course, allows a consumer to get by on a lower monthly payment. A lease is essentially a long-term rental contract, with the monthly payment primarily based on how much the vehicle depreciates or loses value during the life of the leasing contract.

According to DesRosiers, Canadians who buy a vehicle new typically keep it for 8.2 years. If you are one of those who owns a vehicle for the long haul, say for a 6-to-10-year lifecycle, you "should not be leasing a vehicle," he says, adding that leasing can be a very good option, "but it's not a one-size-fits-all option."

Jim Ward, a car lover who works in mortgage lending for Merrill Lynch in downtown Toronto and commutes home to Ajax, has gone both routes, leasing and buying, and says he understands the benefit "of the lower cost on a monthly carry basis."

But the restrictions that come with leasing a vehicle for several years — the locked-in contract, the kilometre limit, the potential wear-and-tear costs and the maintenance requirements, have become worrisome now that the family is looking to replace not one, but two, family vehicles.

"I'm leaning away from leasing because of the restrictions associated with it," he says, adding that when he returns his current leased Subaru WRX STi, he's going to get "smacked" around a bit by the leasing company for not only exceeding the kilometre limit, but also the "damage, the scrapes to the spoiler and whatever else is deemed damage. I've probably got to get a new set of tires and that sort of [maintenance] thing, too."

DesRosiers says leasing may not be a good idea for perhaps as many as two-thirds of Canadians, though that means perhaps one-third of consumers should consider leasing a new vehicle. But anyone who leases should know, he says, that as a way to get into a new vehicle, "leasing is very expensive.

"Don't get fooled by the monthly payment. Leasing is absolutely the most expensive way to finance a vehicle for the life of a vehicle."

That said, a reduced monthly payment is very important for certain customers, particularly those who drive higher-end cars. Also, for some buyers, leasing is attractive because it doesn't tie up capital in a depreciating asset — a car.

Vancouver-based chartered financial analyst Brett Simpson, president of Rogers Group financial planners, agrees that for most people the big driver to leasing is the lower monthly payment. "But that's a price discussion, not a value discussion. I don't think you're getting the best value, though, when you lease. The value proposition will be greater if you own [a car] over the long term."

And that value discussion takes us back to the average Canadian who buys a new vehicle and owns it for 8.2 years. Typically, most new-car loans are paid off within four years. So your average Canadian car buyer can look ahead to at least four payment-free years with each new-car purchase. By contrast, most vehicles in Canada are leased on three-year contracts.

"And so leasing automatically pushes you to at least two [vehicles]," says DesRosiers. "You've got to depreciate that asset and pay the capital cost on two vehicles in eight years if you lease. Whereas if you buy, you only need one. You cannot build a case for me that buying two vehicles is less expensive than one. Leasing is a monthly payment for life."

Never forget that with leasing you, the lessee, are renting a vehicle from a leasing company for a specific period of time (usually two or three years), for a monthly fee.

You are responsible for buying insurance, maintaining the vehicle and not exceeding a kilometre restriction that is typically about 20,000 km a year. Go past that number and if you have not negotiated in advance a provision for extra kilometres at an affordable rate, you can face painful penalties of 20 cents/km or more.

Of course, when the lease is up, you do have the option of buying the vehicle for a price generally specified in the leasing contract — a so-called "closed-end lease" with a purchase option.

What virtually no one wants, say financial advisers, is an open-end lease with the vehicle's value determined at the end of the lease. "Always get a closed-end lease," says DesRosiers. "Let the leasing company take on the residual [or resale value] risk."

If you are going to lease, be comforted in the knowledge that leasing companies in Canada no longer shroud leasing in a veil of non-disclosure. Back in the 1990s, when leasing was last booming, many contracts failed to show consumers all the specific terms of the deal. It was not uncommon for one or more of the following items to be kept hidden from lessees: capital cost, interest rate, total interest cost, interest calculations, administration fees and so on.

The vast majority of leasing contracts today disclose all these items in clear terms. Still, consumers must understand what all the numbers and terms mean. Leasing contracts are definitely more complicated than purchase agreements, because, as Simpson and others point out, leasing companies "play with a number of variables" when they write you a lease.

Vancouver-based chartered accountant Ash Katey, whose clients often ask him to evaluate leasing contracts, says that when consumers just shop the monthly payment, the "dealer or the lessor has so much latitude to fleece the consumer."

For Jennifer White, who has returned to university to study social work while also being a mother of two kids and the wife of a busy professional husband, leasing remains a possibility, though she is leaning toward making an outright purchase.

"I guess my advice to anyone considering a lease is not to do it for more than three years," she says. "Then you probably won't be getting into [replacing] things like tires. And be realistic about how many kilometres you drive."