Leasing is not financing a purchase, as you did, it is renting. Financing I don't actually have a problem with for cars & homes, otherwise I try like hell to avoid debt. Leasing is bad because you can easily end up owing significantly more than the car is worth. And who can live with a 12K/year mileage limit?

Looking at your example numbers, though, there are a couple things I'd have to argue with... Like a $645/month car payment (yikes!). That & another C-note would've covered my mortgage payment - no way I could afford that.

$645/month for 4 years only comes to $30,960... you'd still owe on it. Payments at a more normal 7% would be $695. If you got a 3+% loan (to get to $645/mo), you probably paid for it somewhere else. Uber-low financing always has hidden costs.

Don't forget the $29K you invested is at risk, and you'd have to pay taxes on the interest/capital gains. If you were paying a more normal 7% interest (>$4300 over life of loan), you'd have to have guaranteed investment returns of somewhere in the neighborhood of 9%, and I hope you didn't invest it in Enron or Countrywide Financial - you're not going to find 9% at your local S&L.

So paying cash is really like getting a guaranteed risk-free tax-free ROI of 6-7%. I can live with that.

Yes, we could argue the nuances of numbers all day, and it wouldn't be worth it in the long run. Financing a purchase is certainly a valid option (and always better if the dealer is NOT involved in financing). I was fortunate that I could pay cash - but I had a modest inheritance that allowed me that and to pay off the mortgage too. It's good to be debt-free in an uncertain economy.