[Purrybonker]

I've done the leasing thing a few times - it makes great sense in some cases (even putting tax consequences aside) - but you really have to shop and be on top of your game. I like leasing because it removes some of the ownership administrative burden -like disposing of the car when it's time for a new one for instance.

Lease payments are lower than loan payments because you only make principal payments on the depreciation, not on the whole value of the car.

When you buy a new car there is really only one basic point of negotiation - the price. Leasing brings in a whole new set of parameters, many of which vendors will do their very best to try to turn to their advantage. With a huge percentage of new vehicles being leased these days, the sellers/lessors are definitely on top of their game.

Leasing has three basic parameters - start price, lease rate (interest rate) and end value. Basically your lease payments cover three things; depreciation over the term of lease, interest burden on the undepreciated (lease-end value) and interest burden on the declining depreciation amount. These numbers all may vary from car to car and even from lessor to lessor on the same car. It all depends on how much vig the lessor wants and how much the lessor is prepared to gamble on the value of the car at the end of lease. Keep in mind that a few dollars difference on a monthly lease can add up to hundreds over a lease term. I wont go into all the permutations here, but do the following if you decide to lease (at least this method has worked for me):

Send an email to every dealership and major independent vehicle leasing company in a reasonable sized area (as far as you are willing to travel) asking for quotes on:

1) Cash price on defined (list all options and variations) vehicle.
2) Monthly lease payment with zero down over desired term (24 or 36 I would suggest). Forget BS about "lease rates" - compare payments, that's all that counts.
3) Lease end buy out value.

You might be suprised at how the lowest guy on number 1 might be the highest on number 2. Do your number crunching and figure out what makes sense for you. Don't forget to consider manfacturer cash rebates in lieu of supposed bargain lease deals.

Generally you want the highest lease-end buy out you can get(this makes monthly payments lower). But that can work against you if you decide to buy the car at the end. I just did that and ended up paying about $1k more than retail because I really wanted to keep the car. I couldn't bring myself to let it go and try to replace it with a similar car. But I guess in the long-run it all shakes out, I benefited from lower payments for a couple of years.