All else equal, (it never is) leasing a new can be a better deal for the consumer than buying new, but you have to know what you’re doing.
As said before, if you can buy at a several thousand dollar discount but the lease is calculated at 100% or greater of MSRP, then, yeah, the buy is a better deal. You should be able to get the lease calculated at the same price as the buy. If not, walk.
If leasing, you have to make sure the lease payment includes “gap insurance.”
I’d stay away from 3rd party financing–less likely to be flexible with you at the end of the term.
Do not even think about leasing a car if you might average more than the included 12,000 miles/year.
If your cars have pretty much looked like they’ve been through Hell’s Ditch at the end of three years, leasing may not be a good idea.
It boils down to preferences: millions who lease are not all idiots. I would love to see a cite on the number who follow the rules and only lease once. It can’t nearly be nearly 100%
If you want a new car every three years that is always under warranty with a significantly lower payment than a 60 month buy, leasing may be for you.
Example: in late '99 model year, my wife leased a new '99 Saturn SC2 with MSRP of $20,000. Five year loan with no money down at 8% = monthly payment of $476. No way that’s going to happen. Instead, we got a three year lease with no money down for $325 per month. Critics scream “but you don’t own the car after three years!” And damn glad I am that I don’t.
The agreed residual on this car on 5/02 was $11,600. I knew they were smoking crack; there is no way this car at 4 model years old is going to be worth that much, but since I have no intention of buying the car and the inflated residual artificially lowers my payment, I’m all for it. At the end of the lease the car books at $7,500 and I’m laughing all the way to the bank. GM charged me only $9,400 in depreciation but true depreciation was $12,500.
Let’s look at the guy who buys the same car. He pays $476 X 36 = $17,136 for 36 months vs 325 X 36 = 11,700.
But wait, you say, the lease guy doesn’t own the car. Yes, but he can walk away after three years and owes nothing. The true owner can’t walk away after three years because he still owes $9,000 on the car and it’s only worth $7,500.
So the owner keeps the car to term and spends two years of exposure out of warranty buying tires ($400) a tune up ($250) an exhaust ($400) a battery ($100) and possibly worse. Meanwhile I’m in my second lease at $325/month. I’ve spent $325/month * 60 = $19,500 whereas the owner has spent $476 X 60 = $28,560 less the net value of the car after 60 months ($3,000) = $25,560 plus any non-warranty and maintenence items. In this example, I’m at least $6,000 ahead after five years.
Yes, everyone knows someone who got screwed on a lease. But as long as you know what you’re doing and the automakers are willing to provide hyperinflated residuals, I will take their money and drive a new car every three years.
If you are the guy who can buy a late model used car at wholesale and get new car financing on it with little or no money down while the thing never breaks, ever, and never needs any maintenance, and you keep it FOREVER, my hats off to you becuase your deal will be a little cheaper than mine.