My 0.02$ worth...
I'm on my 3rd lease now. First was a '98 Volvo V70, 3 yr lease w/ 20,000Km per year. Did a little more kms than expected, but paid only 600 CDN for extra (6,000 km @ $0.10) when I gave back the car in June 2001. In '99 (one year into my lease!), my daughter decided to draw a nice big sun on the hood of my car with a sharp rock... right down to the primer, with gashes 1 to 2mm wide. When I caught her on the hood doing her thing, she slid off still pushing the rock on the car: the sun turned into a sunflower with a nice stem down the right front fender. Would you believe it, I never was charged a cent for this!
Second car is the current one: Acura TL type S. This one I leased with a higher mileage (24,000km / year). After 4 years I'm at 66,800 km, and I'm giving this car back this week- I'm picking my 3rd lease, which is the '05 GT. Again, no problem with the inspection firm, even with small brake mods (slotted and perf disks front).
It seems that the lease scams are mostly over now. Normal wear and tear is accepted: bumpers small scratches, stone chips on the front of the hood, door dings (as long as they are small)... no problem! Of course you have to keep your car in tip top shape (the biggest issue being the tires, I gather from my encounters with the inspection firms), but if you're a car nut, you usually do anyway! And usually, don't we always do a lot of things to the car we want to sell prior to selling it anyway?
Of course, I lease my cars with minimal or no cash. I actually always give about 2,000 CDN, but that's because I'm stupid as most of my friends / collegues lease with no cash except the security deposits. Of course, I never buy the car at the end of the lease. Point taken: my TL-S purchase value was $CDN 42,009 in aug. 2001 (it was a 2002 model year), and the buy-back at the end of the lease is an astonding 21,730 CDN + tx (over 50% value retained after 4 year - way better than the Mustang : i have only 51% after 3 years on the lease I'm getting!). However, due to the fact that there is now a new model, the real value of my car after 4 years is probably under 20,000 CDN even with the low mileage. It is really not worth buying it.
Now, why do I lease? I'm a Sales VP doing pretty good, so I could afford to buy, no? I lease for mainly 4 reasons:
1) I don't want to keep my car more than 4 years (actually the Acura lease felt too long!)
2) I get a car perk that is added to my paycheck. I therefore pay my income taxes on the car allowance. under the taxation laws of Quebec and Canada, it is actually easier to deduct a lease than amortize the purchase and do the deductions for the interests paid on the loan (if any), which means I get a nice tax refund at the end of the year, while the other way (buy and amortize) could mean that I have ot pay something once I sell the car (if the sales value is higher than what was left after amortization, its considered taxable income) as we always are more agressive amortizing the car value;
3) Helps push a new car to the missus every 3 to 4 years
4) I can't stand my car with big damages so I keep them clean and in tip top shape (except for sunflowers drawings, which was actually funny to show to people).
I did some calculations a while ago, comparing a lease to a buy with little or no cash with a resale or return after 4 years, and it did come to about the same (less than cdn 1,000 higher for the lease). If the car will be a keeper (more than 4 years) or if you will do a lot of mileage, then a lease is not for you. if your financial (read job) situation is rocky, it is not for you either, as you can't get out of a lease as you can unload a car and pay off the loan. Penalties are quite steep when you want to get out of a lease, and it could affect your credit ratings. Actually, this is why I go with reasonable cars instead of BMWs or MB. You never know when bad luck will hit you!
In my case, our second car (the one that sleeps in the garage) is another Volvo: XC V70 (yes, the awd sleeps in the garage, while my fwd is stuck in the inclined snow covered driveway!!!) which we use as a family car during the week-ends, especially during the ski season. This car is a keeper, and we bought it. We plan keeping it for 6 to 8 years - we do approximately 15,000 km / year on this one.
Of course a lease means that I will never make big mods (except brakes and wheels/tires) as it would be stupid to give these away to Ford Finance... Mind you, I'm not fond of making mods that could void my warranty either, so I would do mods in the 3rd year, not the first (especially since this is a first model-year).
Now, another 24 hours before picking up my new pony... Hope I can sleep tonight!
. I would think the 12K down would be able to buy out the 3 year lease on a nicely equipped GT. We have alot of Lincoln customers that do that here, make a one time lease payment and drive the car for 2 years with no payments, at the end of two years they pick out the next one, write the check and away they go. It makes sense not to pay the full boat sales tax if you are going to flip the car in two years.
