People who say the worst things about leases are people who have never leased a car in their life. They just repeat the stereotypical rhetoric they hear from others who have never leased a car.
In this thread, I see words like complicated, expensive, large down payment, but I wouldn't use any of them to describe car leasing. The process is pretty straight forward. It's a simple formula to calculate a lease price, give or take. You are paying for the depreciation of the car (the manufacturer tells you that the residual value of the car after 3 years @ 12k miles/yr will be 60%, for example, so you are using 40% of the car value).
If the negotiated sale price (you negotiate a price even though you are not buying it, this price will be used to calculate the monthly payment) is 30K for example, 40% is $12,000. That's the depreciation cost. Divided by 36 is the monthly depreciation cost, $333.
Then there's a financing cost. Since you are getting the car upfront, the bank is putting up the money for you and you pay the bank back, so there's a finance portion of the monthly payment, usually 2-3% annually, depends on popularity of the car and market conditions, similar to new car loan. It could be $40-80. And then add sales tax and you have your monthly payment. You also have a bank fee and DMV fees but those come with new cars too. I have never paid any document fees or any other made up fees that some people fall for. I leased a brand new Toyota Rav 4 in 2009. The sticker was 31,000. I negotiated it down to 28k I think. The residual was like 60%, I ended u paying $350 all in.
You CAN put money down to offset the sales price, but not recommended when leasing. Those commercials that say $199/mo with $2999 down are for suckers. With no money down, that car will be about $279/mo + tax.
As for the "complications"... Yes, if you drive more than the allowed contracted mileage, you're gonna get screwed (about $0.20-.30/mile over the limit). So if you plan on driving 15k miles per year don't sign a lease for 10k/year. DUH!!! You can customize the lease according to what you'll need. It will increase depreciation and your monthly payment but no crazy overage charges. And if you bring it with holes in the seats, dents, or missing carpets, you're probably gonna get charged.
I take decent care of my cars, so I've never been hit with excess wear and tear. My cars are not spotless but I don't have tears in the leather or dents all over the place. Some parking scratches on bumpers and door dings are acceptable. I was told once that you do get about $1500 allowance for tear and wear before they start charging you.
In fact, my last Toyota was in such nice shape and had less than 27k miles when the lease was for 36k, that they took back the old one and put almost $2000 towards my new one. They bought out my lease and then resold it and probably made a few grand, so they put 2k towards my next lease.
Yes, I agree if you are looking to buy the car at lease end, don't lease, just finance it, you'll save a couple thousand. But if you like driving new cars every 3 years, lease it!
The good things about a lease are that you pay a much lower monthly rate on a 3 year lease than if you were to finance a car for 5 years. For example, my current car is worth about 42k, I lease for $401/month all in for 3 years/12k miles per year. If I were to finance the car for 5 years, even at 0%, it would be $720/mo with tax. Good luck finding 0% loans, and with no down payment. You will need to put down a couple grand for a new car loan. I have never put down anything more than 1st month's payment and DMV fees when leasing. So while you always have a monthly payment, you pay much less and are always driving a new car
under warranty, so no out of pocket expenses when crap breaks. And now, manufacturers are including services. My latest Toyota came with 2 years of service free (oil changes only but I don't do anything more than that). After all, it's technically their car, if they think oil changes are enough, then it's all good. I did 1 oil change since the free services ended in March this year and the lease is up in March, but I'll probably get a offer to turn it in a couple months early and get a new lease. But I'm getting my first Beamer (X5 or X3) next so I'll probably keep it till March so I don't have to drive my new car in winter.
I have always leased, never bought a car. Since age 24, I have had five 3-year leases (2 Jeep SUV's, and 3 Toyota SUV's).
For me, it's a no brainer, but each person should look at their situation and do what best for them. To me, the best part about leasing is the lemon protection part of it. If I lease a car and it's a lemon (meaning it's always breaking down--when I was a kid, my parents bought a Chevy that was in the shop literally from the moment it left the lot. It had a tranny overhaul in the first year...wtf!), I just drive the lease out and repair using warranty. With leasing, all repairs are covered under warranty (as with buying), but at the end of the 3 years, you return their lemon and don't have to deal with it anymore. If you buy, after the warranty ends in 3 years, that's when you'll start pumping cash into it. Good luck selling a car like that.
FYI-I'm not a car salesman or loan officer. They are all grease balls who look to screw you if they think you won't call them on it.
