I suspect you have to buy it (though financing should be okay), but I never looked into the lease option (which is a kind of financing to begin with), and supect that would not give you the credit. Assuming I am right, with the credit you would likely be better off buying and financing than leasing, but time is running out to get 100% of the credit.

From http://www.fueleconomy.gov/feg/tax_hybrid_new.shtml#phaseout

As I understand it, you don't get the tax credit if you lease. But somebody does (either the dealer or the bank) and you can insist they share it with you. If you're paying for 50% of the depreciation of the car, then you should get 50% of the tax credit, don't you think?

My wife's lease is almost up and she's looking into leasing a hybrid. We're going to lean on the dealer as best we can during the upcoming negotiations. We're going to try a strategy where we play dumb on the issue and pretend to assume we're getting the tax credit. When we get a final number and "find out" we don't get the credit, we'll freak and head for the door. Then we'll "settle" for half. Maybe it'll work.

David

The tax credit is 100% for the specific qualifying vehicle, meaning $3150 for a Prius, less for a TCH, Highlander Hybrid, Lexus Hybrid PUT IN SERVICE through 9/30. Meaning you HAVE to take delivery no later than 9/30/06 (and no EARLIER than 1/1/06). On 10/1, because Toyota Motor Corp sold 60,000 qualifying vehicles before July 1st, the tax credit drops to 50%. It drops again but I don't know the schedule. The 60K vehicles number is PER MANUFACTURER, not per 'brand'. It is a 'Big 3' protectionist scheme since they are late accepting the fact that guzzlers will not be big sellers as the price of gas goes up. Had they paid attention to the technology (not the sales figures) Toyota & Honda put on the road in 2000, they would be in better shape today. Instead they get the congress/senate to stick in this cap.

I don't know how many people bought a hybrid instead of a similar priced/size vehicle BECAUSE of the tax credit, or how many would have purchased it anyway (which includes our Barcelona Red) and are just happy the get the credit ($3,150 off MSRP ).

Bruce