Some poeple are totally fixated on “owning”, and for them, lease doesn’t sound appealing under any circumstances. If you are one of those, don’t read any further. 
If you don’t consider yourself a good salesman, then leasing makes sense. Why? you ask. Because once u ‘finance’/buy a car, after driving it for a few years you will want to sell it, and selling does not come naturally to all people. Some consider it a hassle.
Let me recount the benefits of leasing.
- Your upfront, downpayment, is typically small.
- Your monthly cash outflow is smaller compared to finance. You can get more bang for the buck and can opt for a more expensive car/SUV.
- You drive the car for four years (or whatever the lease period), and just when you have gotten bored with it, you can get rid of it.
- At the end of the lease period, you have a choice. (a) Keep the car and pay its residual value. (b) if the resale of the car is better at that point, just sell the car and pay off the residual and pocket the difference (c) return the car and walk away.
The residual value is calculated upfront. Lease payment is nothing but a combination of depreciation and interest. The leasing company will tell you that in 4 years that car will depreciate e.g. 48%, then the residual value will be 52% of the original price. So before entering the lease, you can figure out if the car will be able to retain its residual value in the 4 years.
If you are not a good salesman, then you won’t have to worry about selling the car, and can just return it to the dealership (ask them to sell it for you or just ask them to keep it) depending on whether you wish to re-sell and pay off the residual or not.
If you really really like the car, then just pay the residual (either upfront, or finance it) and you own the car. So essentially in a finance arrangement you pay higher down payment and higher monthly payment, whereas in the lease, instead of front-loading the higher cash-outflow, these savings can be applied in paying for the car at the end of the lease.
If you own a business or can run through the lease interest in your taxes, thats additional bonus, because thats a tax deductable expense.
Leases typically make sense for those who want to drive a newer car every 3-4 years, and for those who don’t drive a high number of miles. Even if you drive a high number of miles, as long as you plan to buy the car at the end of the lease, you shouldn’t worry about the miles. The only time the leasing company will check the mileage or the condition of the car, is when you return the car and walk away. If you are paying the residual (buy it or re-sell it), the leasing company won’t even bother looking at the condition or the mileage.
For more information check www.edmunds.com and their Leasing FAQ. It tells you how to compute the lease and how to negotiate the lease. Don’t be fooled by the advertised monthly lease. You can always negotiate it down. The monthly lease payment is dependant on how much you negotiate the price of the car. When you negotiate the price of the car, don’t even mention that you are planning to lease or buy, just focus on the price.
If you wish me to explain any of the above in more (convulated :)) detail feel free to ask.