If you buy the car outright, you can usually negotiate a deal on it and perhaps pay $37,000. Now after 3 years your vehicle might be worth $20,000 and you're out $17,000 in depreciation, in simple terms, not including taxes etc. If you keep the car 5 years, or better, 10 years, you end up way ahead if course, but if you keep it only 3 years, leasing can be more attractive because you don't have to try and sell or trade the car and get a lousy deal on that.
That was my thought. We're looking at a Lexus RX (or possibly NX), and I figured that if we leased and then bought out the lease, we'd probably end up paying more overall than just buying.
And with a lease, as you mention, you have no equity. If you buy a car and over those first three years it's lost 40% of its value, but you've paid down 50% of its purchase price, you have equity. If you lease, you have nothing. But then if you've leased it for 3 years and still want to buy it out at 60% of its price, you'll end up eventually with equity but you'll end up overpaying for it.
The problem with leasing IMHO is that folks can buy a more expensive far for the same payment as they would if they bought it, so they do, and they of course end up after 3 years with zero equity, and get "hooked". It's best to pay cash for the car and keep it a long long time, and better yet to buy used if you can, something off lease. Don't get swayed by these "Factory Reconditioned" or "Certified preowned" whatever claims, those are mostly bogus.
That's my take as well. Leasing is a great way for people to drive cars they can't legitimately afford.
My thought has always been as well that lease buy-outs is largely a way to sucker the people who tried to get into a too-low lease payment with restricted mileage like 10K a year when they legitimately drive 15K, and then are effectively forced into buying the car out when the lease is up because the excess mileage charges aren't something they can afford.
Best option is to buy a preleased car and let someone else take the depreciation, and then keep it a long time. Cars last a long time these days with little or no repairs.
That last part is precisely what I've done for the last 25 years. Let someone else take the brutal beating, and nowadays you can get a 2-3 y/o car with a certified standing for really good prices.
That's what I've talked her into. A CPO RX 10-15K miles is something like a 20% discount over new. That's certainly not 20% of that car's life, since it's a Lexus and should go 200K+ miles easy. And they come with paid maintenance plans, warranty, etc.
In fact, though, that makes me think of another benefit to leases from the dealer's perspective. It allows them to "sell" a car for 2-3 years undoubtedly soaking someone to pay more than the depreciation legitimately warrants, then take the car back from them and sell it for its real market value. Given the number of people in the market like me who want cars used with low mileage to let someone else eat the depreciation, it gives them a fleet of cars to sell to that consumer. I'll bet there are a LOT of us...
