Maybe I'm dense, but I still don't see why you would come out ahead by leasing a new vehicle.
The downsides, as I can see them:
- you have to pay several K up front (someone above advised "rolling it into the lease", but you're still paying it)
- you have a (relatively) high monthly payment
- you have no asset at the end of the lease to show for that money you've paid
- if you drive it more than their mileage limits, you're liable for potentially heavy penalties
- you're locked into a multi-year contractual obligation from which it's hard to extract yourself
- as you're left with nothing, you'll need to arrange to get yet another vehicle after the 3-4 year term
Am I missing something blatantly obvious here? Why is leasing better? I've always believed leasing was just for suckers ...
It's all about what you're comparing it against. If that comparison is against purchasing a new car, the lease can make sense in some cases. If the comparison is lease versus buying with cash and driving until the wheels fall off, then leasing usually doesn't make much sense.
As to your points, lower monthly payments is often part of the appeal for leasing. Since you only pay depreciation plus an interest rate usually close to the same rate as purchasing, you are looking at lower monthly payments over a three year lease than buying on anything shorter than about a six or seven year loan, depending on the residual value at the end of the lease. Also, leases don't always require a large down payment, unless you're looking to make your payments as low as you see in the television ads. They can be just as low as buying.
You're right that you don't have an asset at the end of the lease, but most leases give the option to purchase the vehicle for the residual value at the end of the lease. So if you want, you can keep the car, either paying cash or obtaining used car financing. Also, many leases are actually quite easy to get out of for a fee. I've seen leases that you can break for as little as $150.
The mileage limits are the worst aspect, but understandable considering extra driving means greater depreciation. You usually have the option to pre buy extra miles up front if you think you will need them for something like $.05 per mile. The penalty if you go over is something like $.10-.15 per mile. If you know there are high chances your life circumstances will change during the lease and may require more driving, that might be a reason to buy instead of lease. These fees for going over mileage usually won't apply if you buy the car at the end of the lease since you make the lender whole by paying residual value.
The only issue with leasing and planning to buy at the end of the lease is that used car interest rates are higher than new, so you'll pay a little more in interest going that route, assuming you didn't save cash to buy with. Neither buying new or leasing is mustachian, but really they're not all that different financially over the long run if you churn through cars like most Americans.