I used to run private lease companies and trained dealership sales teams in leasing. years ago the factory finance source would negotiate buyouts with dealers but do to abuse and factory shortfalls the practice was stopped. Now all lease turnins must go through the auction. The factory bases the lease on the stated residual and to sell the vehicle for less causes a loss. Most lease companies used to buy 'residual value insurance' insuring the residual for stated amount minus a small deductible. The cost of the insurance has risen to the point that it is no longer used. Most factory leases are subsidized either in money factor or vehicle price- they are using leases as a means to move inventory without having to resort to 'rebates', which are a sign of 'distressed goods'.
Leasing can be a great program, depending on your needs. If you have a business a finance lease could greatly benefit you. Used car leases are terrific programs but you must deal with a private lease company. I currently have several vehicles and only 1 is leased-my wife's car. She drives little and likes a fresh car every two years. I usually get her a dealer owned and titled car that has been re-invoiced to the dealer as a rental. They are substantially below original invoice but can be leased as new. The lower capitalization but same residual and money factor results in a lower payment/cost. Using a lease as a means to acquire a new car, paying it down to the residual and having the ability to walk away or purchase it is a great option. My two daughters have done this and purchased the vehicles at maturity. The option is comforting-especially if the value nosedives, or you have an accident. All titles are branded today and you can simply turn the unit in at maturity, or if it's pristine and used vehicles are high, enjoy the bargin and buy it.
