IMO, buying a brand new car on credit as a lease is a huge waste of money. I stopped doing it years ago. Never pay interest to anyone for something that depreciates! This isn't a difficult thing to figure out, but all too often the "gimmies" take over and the buying becomes emotional and completely unrational.
Now buying a two to three year old car with a factory extended warranty on it where some other person has paid most of the initial depreciation on the car is the smart way to go. I did that with my LS400 (a 95 bought in 99 from a dealer as a certified pre-owned) and it's paid off in spades. Car was 60% of sale price in 95, and I had nearly $9,000 worth of free maintenance and repairs done to the car over the next 36 months. I got them to replace all sorts of stuff and they never blinked an eye at my requests because the warranty backers were so good. The car is in top shape now and only 10 years old.
I'd only borrow on a used car if the interest rates were terribly low, say 2% APR and I could prove to myself that my investments were outpacing that 2% loss for the next X years of payments.
And personally, I don't borrow money on used car purchases either. If I can't afford to pay cash for it, I do not buy it. When I can afford to pay cash for it, I am very, very cautious because the day after I take possession, the bank account is dry and that makes me feel really lousy. I worked hard for that cash and it looked great in my account!
I think my bottom line is that buying or leasing a new car is a very expensive proposition, but I highly recommend it to all you young people because it creates so many 3 year old creampuffs I will then buy from you for a fraction of their "like new" value.
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