Principles of finance question - decision whether to least a car or take an installment loan on it?

I would consider neither options. If you can't afford to buy a car and pay outright cash you're making a huge mistake. Do you really want to be honest with yourself on this question? The facts are that the moment the car drives off the lot you have now lost 20% of the value of the car, and how can that be good business? Second now you factor in either of the options you are considering and again you have lost money. The first option is the most profitable for the dealer so you know that can't be good for you. The second option with an APR of 8% is nuts. Now, lets say you have some cash which I'm not sure you really do, but I would be researching the clifieds for someone that has lost their job, and needs to sell their vehicle quick. One that is at least two years old with the depreciation already taken by them, and if you don't have all the cash you can get a used car loan from almost any Federal Credit Union for between 4 and 5%. I know this isn't what you want to hear, but it is what you need to hear. Skip trying to impress your friends with the nice wheels and impress them with your great sound money advise. Best of Luck kid! Last note: Rich people buy almost new for 30% off sticker price, now go do what they do!