Tony Walker 49up

Leasing companies (including the ones that are owned by automakers) have two reasons to love leasing. First, it allows them to make a lot more interest on every car they finance, since less principal is being paid off in every lease payment.
For example, on $20,000 loan and lease balances, at 8% for 3 years (50% residual on the lease), total finance charges on the lease would be $3,608. On the loan, total finance charges would only be $2,572. So you would pay $1,036 more in finance charges over 3 years on the lease, compared to a 3-year loan. The interest on this 3-year lease is just a little less than the total interest that would be paid on a 5-year loan (same APR).
Paying off less principal in a lease lowers the monthly payment dramatically, but it also causes higher finance charges. This is why credit card companies encourage people to make only minimum payments—they get more finance charges that way. And that’s one of the dirty little Secrets of leasing: It’s the automotive version of minimum payments on a credit card.
Leasing companies are also able to make more interest because they are not required to disclose the effective APR that’s being charged. (So they don’t.) Because of this loophole, a lot of leasing companies charge higher interest rates on leases than they do on loans. (They have to disclose those.) This is especially true of leasing companies owned by automakers.
As if those reasons weren’t enough, there’s one more:
Because they are the legal owners of the leased vehicles, leasing companies get to write off all the depreciation— even though the depreciation is being paid by their customers. No wonder they think everyone should lease. —