I apologize in advance for the length of this post. I have been quietly following this thread and decided that all sides were not being fairly represented so I had to chime in.
I *can* buy a Mada 3 outright and I *can* afford to finance a Mazda 3, but if I decide to get this vehicle I will lease.
Of course buying outright is the best in some situations but this is by no means the absolute rule. Additionally, not everyone can afford to buy outright. People use credit cards, people get loans to go to school, etc. Not everyone can afford to buy, but it's still nice to drive a new car. Yes, many people really shouldn't use credit and they end up getting themselves in heaps of trouble, but many others can and do use it successfully and cautiously. Some people will argue that if you can't afford to buy outright then you can't afford to have a car. Not so. Many people also can't afford to pay for university/college but nobody's saying that they then shouldn't go. Some people would be willing to get a loan so that they can go to a good school and get a good degree. Those people may be just as willing to get a loan or sign a lease contract to get a good car. I have gone the used route and the new route and the ownership experience has been so much better with the new car.
One line of reasoning says for large purchases, buy things that appreciate and lease things that depreciate. An extension to that rule is that if you're going to buy something that depreciates, make sure the depreciation history is "good." They argue that nobody would buy a house if it would be worth 55% of its value after 4 years. A Honda Accord, for example, is a car with a "good" depreciation rate and history and, therefore, would be considered a more reasonable purchase despite being a depreciating investment. The Mazda 3 has no depreciation history -- only a theoretical rate based on Mazda finance calculations based on the car being absolutely fine (no bad recall history adversely affecting its market value). I bought both my car and my motorcycle because they were solid, proven vehicles, in which I had full confidence. I didn't need to lease the car so that I could drive it for for 2-4 years and see if it would be worth keeping. I didn't need to finance the bike because I already had cash set aside for the purchase and knew that it was a quality vehicle with essentially no problems. They were "100% certain" decisions so there was no need to buy security in the form of a lease or to buy time in the form of financing.
My present situation is such that I *could* buy a Mazda 3 outright, but why? I've never owned a Mazda and the 3 is in it's first year of production, with essentially no history. Yes, Mazda thinks that after 4 years of use it'll be worth 50% of its original MSRP, but what if they're wrong? What if it turns out that there *is* a major design or manufacturing flaw, subsequent recalls, and a huge increase in the depreciation rate of the vehicle? If you own it outright and that happens it's a very uncomfortable position...unless you have so much money that you don't care about your vehicle incurring greater depreciative losses above and beyond what it would lose just for being a 4-year-old Mazda. If you're leasing, then at the end of the term you just give back the lemon that you've been renting and tell Mazda you're going on a no citrus diet.
There isn't only one way to lease. Most people only know of the conventional leases (different manufacturers have different names for it, but they're all basically the same concept). If you do a 48-month lease correctly then on a $25000 Mazda3, you can end up paying only $2000 in interest over the term, assuming you buy the vehicle outright at the end of the term. This compares to paying $1000 in interest over the term if you finance the vehicle for 48 months and $0 in interest if you had just purchased the vehicle outright from the start. i.e. you've done things such that you're not stuck with the vehicle if it turns out to be a lemon, and the cost to you for that security/convenience is $1000 more than if you had financed the vehicle or $2000 more than if you had bought the vehicle outright from the start. This $2000 over 4 years works out to $500 per year and I see that $500 per year as being security "just in case" the car turns out to be a dud. I pay $1000 per year to my insurance company "just in case" I end up in an automobile accident. I don't see paying $500 per year "just in case this first-year production car with no history to its name turns out to be a dud" as being ridiculous. BTW, these numbers aren't made up. I researched this extensively and then sat down with a Mazda finance agent and worked this out. If you're interested in purchasing a vehicle and saving money but also getting the vehicle in a context that works best for your life then you should do the same. It means more pre-purchase research and contemplation, but the payoff could be immeasurable in terms of peace of mind down the road.
I have to address the idea that leasing inevitably leads to more leasing. Leasing once doesn't mean you will be stuck leasing forever. This can happen (just like renting an apartment), but the options at the end of the lease term ar: (A) buy the vehicle if you end up really liking it; (b) give the vehicle back and finance your next vehicle; (c) buy a new vehicle outright. It's not uncommon to lease first-year vehicles since there's no history suggesting that they are a safe purchase. I bought a Corolla some time back -- tried and true. I have no reference for the Mz3 since it's a brand new model. It'll probably be great, but who really knows? With a first-year vehicle there's no way of knowing, and some people, myself included, don't have $25,000 with which they're willing to essentially play the odds. Lease 5 cars consecutively? I think 90% of people would agree that that scenario doesn't make sense, but I think for most lessees the picture includes 1 or 2 consecutive, not 5. At one point we were looking at renting an apartment and buying a car. Our financial situation changed such that we have now bought a house and were trying to decide if we should buy a car or lease a car. If the apartment had been the final decision, we would have owned our car and been renting our home. If we lease a car now, we'll "own" our home and be renting the car. Essentially the same deal -- "own" one and "rent" the other.
As for driving freely (no mileage restrictions), well, that's a very good point and a major down-side to leasing. On the other hand, that's part of the reason I own a motorcycle. 7 months of the year, if I feel like just going out and riding "just because," I can do so. Now I'm looking for a car that will be as much fun to drive as my bike is to ride. Since the bike is my primary mode of transportation 7 months of the year, mileage restrictions on the car don't even play into the equation for me. Going out and driving the Corolla "for fun" never happens. When I use the car, it's simply to get from point A to point B. The bike and car currently *each* see 1000km per month -- i.e. from spring to fall I ride as much as I drive, but I only enjoy one of the two activities. Now if I had a Mazda 3... As far as insurance is concerned, I have been with my insurance company for long enough and with a good enough record that I pay essentially the same premium regardless of the vehicle I purchase. A brand new 3 will cost me no more than my 4-year-old Corolla. As you can see, so much of this depends on your individual situation -- finance-wise, insurance-wise, life-wise. If you buy a car outright and then have a child next year will that put a major strain on your finances? If you get transferred because of your line of work then will the lease be transferrable to your new location? There is a lot of information to consider.
Anyway, that's more than enough for now. If you have questions about leasing and financing options then I strongly suggest that speak talk to your bank or the financing manager at your preferred automobile dealership. Any advice you get on these boards will be skewed to reflect the biases, bank accounts and lives and financial situations of the people who respond. You need advice based on your own situation. All I've done here is present some food for thought and a view of how leasing *can* be a viable option. I could have just as easily presented a case for financing. It's really about what works for you, your finances, your insurance and your life. To me, leasing a first-year car leasing is not as bad an option as some try to make it seem to be, but I wouldn't be looking at a "traditional" lease. Of course, there are other details of my life that will impact my final decisions car-wise, and of course I'm not going to go into them here, but make sure you consider things other than "ideal" financial situations when you make your decision.
