[jphughan]

Leasing definitely has its advantages. As has already been mentioned, sometimes in the form of taxes (though other states make it highly DISadvantageous to lease), and yes, it can also provide peace of mind because if the car suffers diminished value due to accidents or just a bad market, that's not your problem. On the other hand, if the car is worth MORE than the residual value when you turn it in, you can often bargain to get some of that cash, or just sell it privately, buy out the car, and pocket the difference.

So, IF (and that's a big "if") the added cost of leasing plus buying out later compared to financing from the beginning is worth those perks to you, then by all means, lease the car. Just don't be fooled by the lower monthly payment into thinking it's actually cheaper. Leasing can also be convenient if you expect to be making a lot more in a few years, e.g. leasing a car right out of college to keep payments down since you're not making much, but expecting to make enough to support financing later -- I did that, but definitely not with an M3.

However, be aware of one MAJOR pitfall with a lease. Tempting though it may be to reduce your monthly payment, do NOT put ANY more money down upfront than you absolutely have to. The reason is that if you total a leased car, insurance will only pay the remaining balance on the lease plus the buyout value, NOT fair market value on the car. So if you put $20K down and total it driving off the lot, that's $20K you'll never see again (on top of the drive-off depreciation). The reason it works that way is because on a lease, you don't own the car, so technically it's not your loss that insurance has to cover. Insurance is only obligated to make the owner of the car whole again, i.e. the bank, BMWFS, whatever, so any part of the car's value that the owner has already received as payments from you is just making your insurance's life easier.

Another word of advice: Don't trade in a car in which you have equity to lease another one, or if you must, take the trade-in value as a check rather than using it as a cap cost reduction on a lease. That's partly because of the risk I mentioned above; if the trade-in value is used as a cap cost reduction, it works like a down payment, so if you total the leased car, then insurance will get you out of the lease, but you'll have no car and no money from insurance to get another one. But in addition to that, if the trade-in value of your car allowed you to get a lease payment of let's say $800/month for an M3, you might think "Sweet, I can drive an M3 for $800/month", but when the time comes to turn that in, you won't be able to get another car anything like the M3 for that amount since that next time you WON'T have equity in the car you're trading in.