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ACCOUNTANT EXPLAINS Should You Buy, Finance or Lease a New Car

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If you are in the market for a car - you probably asked yourself whether buying vs. leasing is the best option. Or more importantly, what is the best option where you can really get the biggest bang for your buck? In this video, we are going to go over the three main ways to purchase a car, the cheapest option, and as well as important considerations you should know. So, let’s get right into it!
00:00 Intro
00:33 Main Options
01:32 Cheapest Option (Calculations)
11:09 Other Considerations
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14 авг 2024

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Комментарии : 2,1 тыс.

@CIST3 Год назад

I did a similar analysis when I considered how to purchase a new car. In the end, I chose to purchase the least expensive car that met my needs and was reliable. I didn't buy a luxury vehicle. I didn't get the highest trim level (even though I wanted it.) I paid in cash and love not having a monthly payment. For me there is a lot of psychological value to not having the weight of debt. As much as possible, I try to live a debt free life. It may seem unsophisticated, but I sleep well.

@StudywithReform Год назад

Love this!

@tfewald01 Год назад

Well done! I live on Social Security and the minimum distribution requirement from my IRA, with the Lord's help. Not a lot of income, but being debt-free really helps. :-)

@CIST3 Год назад

@@tfewald01 I’m sure it does. I didn’t know as a young person that it cost money just to maintain our cars…I know this might sound dumb but if you don’t have a loan payment then you can maintain the car just fine.

@equivicus Год назад

This is the way

@dartagnan1954 Год назад

Smart

@theamazingspiderman481 Год назад

WHERE DID YOU SEE 1.99% APR FOR FINANCING?!?!??!?! I haven't seen that ANYWHERE.

@goosewithagibus Год назад

Right?? Just bought a van with 7.5%

@lizardman1303 Год назад

@@goosewithagibus damn why so high

@goosewithagibus Год назад

@@lizardman1303 interest rates are up across the board. Even with a near excellent credit (760). In 2020 I was able to get a 4% auto loan with no credit history. It's crazy these days.

@seyemin Год назад

Plenty of low interest rates. Dig! 😂

@raeinstarseed4988 Год назад

@@goosewithagibus what vehicle?

@patlilburn5251 8 месяцев назад

We can absolutely go back and forth about what rates and costs are realistic, but the great value here is the analysis, the takeaways, that allow us to figure out for ourselves and our realities what is the best choice. Very excellent video! Thank you for making it.

@-13eNnY- Год назад

1.99% is pretty unrealistic for most people who are financing. Extremely rare. 3%-4% is already a very solid/good rate for most people. Just avoiding 5%-8% interest for most people is the goal, if possible.

@skyecloud968 Год назад

Sometime you can get better rates with your own bank then going with the car dealer and always read the the CONTRACT. Sometime if you read it says that you don't need to SIGN The CONTRACT. So Don't let the dealers push you around and getting you to sign a CONTRACT that you don't want to sign or understand.

@jayhsu2412 Год назад

This video is moot because the numbers are unrealistic!

@danielaquino6666 Год назад

I thought so too, but Ford (Canada) is giving 1.99% for a finance from 36 up to 72 months.

@noahswarz4914 Год назад

yup, also is very unrealistic for most people to finance a car for 36months. Most buyers finance 60-72. I'm guessing she is going on the assumption of the money saved, if you can safe that much, you already know what to do with your money and you're definitely NOT BUYING a new vehicle (unless is for business or very premium that doesn't lose value) NOR buying CASH

@Riley_1955 Год назад

I just bought a new 2023 Corolla hybrid awd and got 4.5% APR for 36 months from Cefcu and the vehicle I traded in on it was a new 2014 that at that time was 1.99% APR for 36 months.

@tristanblackwood1917 Год назад

Ex auto finance manager now certified financial planner here, good video. Some things to consider: if your car is owned outright or financed and you are in an accident and repaired, the accelerated depreciation will be borne by the owner. If it’s leased that is borne by the leasing company as the residual is guaranteed on a closed end lease. Also pay attention to residual values, if the residual value is higher than you think the car will be worth at lease end, consider leasing. Also if you are using the car solely for business then the whole lease payment will be tax deductible up until the maximum of about 900 per month. If it’s owned you will be able to deduct interest costs and depreciation logging kms used for business

@chowsquid Год назад

The cost of the lease is basically the depreciation. If the assumed depreciation is in your favor, you win. Amirite?

@tblack21 Год назад

@@chowsquid Yup. Cost of a lease payment is depreciation and interest. If the assumed depreciated value at disposal/sale is less than what you sell it for it is deemed a recapture and you’re taxed on the amount you kept. If the depreciated value is greater than you sell for, it is a terminal loss and you can write that off too.

@momoney8343 Год назад

Exactly. This lady don’t know what the f she talking about. Lease its the best option. No even close . U can keep the car at the end of the lease if u want too by the residual value if it makes sense . U pay taxes at a monthly basis. U need a good credit . Thats it

@bluwng Год назад

She over simplified it depends on your usage and intent before you do the math.

@sethtenrec Год назад

GAP … that shoots first the entire argument above

@financenumber2953 Год назад

As an Accountant myself, kudos to you for keeping the numbers simple. It’s clear that Financing is always cheaper than leasing. If you keep the car for around 7-10 years, then it’s more cheaper. Only lease if you have extra disposable income and want a new and shiny car every few years. But for most of middle class people, financing or buying used is the way to go.

@privateprivate31337 Год назад

Thanks for summarizing

@2004cyrus Год назад

“More cheaper?” And you are a professional?

@financenumber2953 Год назад

@@2004cyrus So what you are saying is that Financing is not cheaper than leasing? Sorry if don’t get your message. Thanks.

@trickyzz Год назад

@@financenumber2953 its more expensive and not expensiver. Its cheaper and not more cheaper. He's being a douche and pointing out a grammar mistake. Acting as if everyone's first language is english...

@kevinsiu3769 Год назад

@@financenumber2953 I think he was criticizing your grammar in using "more cheaper" rather than just using "cheaper" or "much cheaper"

@Aaron.Dharma Год назад

When leasing a car you partially pay for sale tax because it is usually based on the amount of each rental or lease payment. In the case of $48486 Wrangler purchasing sale tax is $5196, but you would pay around 50-60% of $5196, $2598 to $3437 when leasing. Overall, cost incurred is about $15000, less than $17132 as mentioned in the video.

@luciik5465 Год назад

Lease vs financing depends on your finances and the brand/ model car. Some dealerships allow you to lease cars for 48+ months, and offer a maintenance package so you don’t have to worry about car troubles. Personally, I prefer to lease luxury cars, and buy low maintenance cars.

@petercollingwood522 11 месяцев назад

I thought all leases included maintenance? Why would you lease a vehcile if you were stuck maintaining it as well.

@nyykihernandez9348 2 месяца назад

Me too leasing is the best option plus I can write it off

@dq303 Год назад

I haven't had a car payment for several years, and it feels amazing

@silvereyedstacker1842 Год назад

I haven’t had a car payment for many years and it is amazing. Only way to ‘get your money out of them’ is to pay cash and drive them until they need so many repairs that it doesn’t make sense to keep them anymore.

@SkarTisu Год назад

Have you had any unexpected repairs or been stranded on the road in that period of time?

@dq303 Год назад

@@SkarTisu never, Toyota

@r3negade47 Год назад

I’m from the UK and have never had a car payment. Bought a second hand car with cash like many people do in my country. In the US people earn so much but they still end up in debt somehow spending loads on their cars 😂

@derbagger22 Год назад

@@r3negade47 well, we travel much further and are independent. Debt is not necessarily a bad thing. Obviously, you didn't watch the video...

@TH-uc2ji Год назад

lease Germans and finance/buyout Japanese cars 🙃

@nomsi4263 Год назад

This is probably the best advice here, haha. Unless you can buy a German car without finance, there isn't any point even if you take good care of the vehicle once that warranty is gone-the price drops. Also, if you want a BMW to be reliable, you must change some parts; that's a given, so add that to the price. Plus, most people here will pay it off after the warranty. So, unless you are buying a good reliable car, where you can make your money back later. German cars, should be leased. Because you can use that spare money to invest.

@Jude74 Год назад

Yes. I’ve had my Honda for over 20 years.

@ryancrawford8042 Год назад

You forgot...run away from American cars

@UnitedShredNation Год назад

Or get a car what you want regarding the origin of country and take care and know your car.

@NoodIndigo Год назад

@@UnitedShredNationpeople taking care of and knowing how certain cars work is why we're saying this lmao

@mitchellmackinnon6019 Год назад

This is a great breakdown, I would add one thing. The opportunity cost will always be more than the interest amount for finance. The interest rate on finance is calculated on a depreciating balance, whereas the interest earning potential should be calculated on an appreciating/compounding balance. I know it's more complicated, but I have seen circumstances where interest rates on earning can be half that of finance rates and the customer still earns more than they pay over the same length of time.

@thesharperb47 Год назад

She said in the video that her opportunity cost was an example and you'd make more in real world situations.

@skroomber Год назад

No, the potential earning interest rate is also on a depreciating asset, because you take out money to pay for the car. They are literally identical if base interests are equal.

@nafslee 11 месяцев назад

Not sure if this was included in your lease calculations but on-road running costs, maintenance, registration, road side assistance etc are all covered in the monthly instalment so that's a benefit worth noting. Also, in Australia we have GST (Goods and Services Tax) and the lease excludes GST so calculations for Australians would be different since the price of the car is lower.

@Luckoftheirish1 8 месяцев назад

I don't know if it's different where you live, but in NH you still have to pay to register your leased car every year. It's not included in your lease payments. But everything else you mentioned is. I registered a leased car last year for $500. And will have to pay $480 to register it again this year.

@jacobbennett4074 Месяц назад

I had maintenance covered on my Hyundai for 3 years.

@Jmab-rv7jc 9 дней назад

Here in cali, to lease a tesla, youll pay $3500 in just fees, aquisition fee, destination fee, order fee, disposition fee. Tax ect. Some bs lol

@citizeng7959 Год назад

That was a good analysis, Gabrielle. Another factor to consider is inflation. When you purchase a car outright with cash, you are using dollars at their highest (present) value. If you finance or lease, over time your payments become cheaper in real terms because the payments are fixed but money is losing value. The real win comes when the finance rate is well below the rate of inflation. So, all things considered, if inflation is high and the finance rate is much lower than the lease rate and prevailing money market rates, IMO the best option is to finance. You take advantage of inflation. You can invest the excess money you would have spent to purchase. And the car is yours to do with as you please without having to worry about charges for damages at the end of a lease. Furthermore, as the car ages is depreciates at a much lower rate, so finance the vehicle, take good care of it, and own it until it dies.

@da11king Год назад

Perhaps you have never heard of Dave Ramsey 😂

@StephenChen72 Год назад

I still prefer to just pay outright in cash. I know if I may be leaving money on the table, but I like owning things. I have a mental block to finance anything that depreciates.

@bpang88 Год назад

This is incorrect. Yes your car depreciates but that is net with inflation. I just sold my 5-year old car for $23k and I bought the car with cash brand new for $28k 5-years ago so it depreciated only $5k thanks to inflation.

@thecorrectoification Год назад

@@StephenChen72 that's like having inverted sunken cost fallacy lol

@citizeng7959 Год назад

@@bpang88 It's certainly true that different cars depreciate at different rates, but the rate of depreciation depends on market conditions as well. Also, the Covid policy-induced supply chain problems distorted the normal supply-demand dynamics for used cars so prices were and perhaps still are much higher than they otherwise would have been. However, if the sale price of your car was higher than normal due to the "inflation", then the price of all cars is higher due to inflation, so you realized less of a loss ONLY if you don't need to purchase another car. If the market value of your house doubles, you are no richer if all other houses doubled as well. My point about depreciation in my orginal comment was that as a car ages, the slower rate of depreciation reduces the cost of ownership. That may be off-set somewhat by the cost of more frequent repairs, but it's still cheaper than, say, leasing a new car every three years because the biggest cost to car ownership is depreciation, and cars typically depreciate by about half in the first three years. So, if you get a new car every three years, you are always paying huge amounts in depreciation. If you buy a two or three year old car, you can foregoe a great deal of that cost if you plan to own the vehicle until the end of its useful life. Then, if you can finance the purchase at an advantageous rate where you actually come out ahead (or simply lose less), so much the better. It's only in very rare cases where you can turn a profit on a vehicle, so the goal is to lose as little money as possible, while maximizing the vehicle's utility.

@gsogymrat Год назад

It all depends on how long you plan on owning the vehicle. I bought a lightly used Toyota in 2003 for $20K and just sold it for $8500. I had no major mechanical problems so my cost was $11,500 plus the cost of routine maintenance for 20 years of transportation.

@dtsect Год назад

What kind of Toyota sells for $8500 at 20 years old?

@ibradeybunch Год назад

@@dtsect Plenty of Hondas and Toyotas if kept in decent condition

@jerryp2433 Год назад

@@dtsectrobably a Tundra. Btw I still have my 2002 4runner that I listed on craigslist for $10k. I got offers for $5k but hellz no. 😂

@IAMDAVIDuRNOT Год назад

@@dtsect 4Runners sell for that price all day

@USMCAllTheWay Год назад

More people would be financially free if they followed your lead.

@dearbulls Год назад

Also, most leasing agreement has a buyout option. So if your lease residual value is lower than actual value, it's best to buy it out at the end of lease. Also, all the cons you listed for leasing, such as the mileage, mod requirements would be no issue if you buy it out.

@pilotrtc Год назад

Good to know! Thank you

@tommieboi707 8 месяцев назад

At that point, it would be better to just buy it out right from the beginning.

@dearbulls 8 месяцев назад

@@tommieboi707 No, it's not. If you are not making enough to first owe 7500 in your tax liability to the federal, especially for those living in non-liberal states

@michaelmiller6878 Год назад

Cool to see the various scenarios here. It would have been fun to see a few real world examples in the sense that most people financing don’t have perfect credit and won’t get that 1.99% rate. Additionally, most people finance their cars for 5-6 years now. It would be beneficial to show people how drastically these change the cost of ownership numbers.

@bunterrR Год назад

Rub a few brain cells together and do the math yourself

@Aggrandize.__ 11 месяцев назад

@@bunterrRthis implies he has more than a single brain cell

@genesisansbro4936 10 месяцев назад

My mom did. Some dealers have these deals. She got it on a Toyota

@debbielockhart7762 6 месяцев назад

@@bunterrRNo need to be so rude.

@intellistar-nc2yv Год назад

The one thing that most comparisons forget to include is ongoing maintenance costs. As shown in the video, the benefit of leasing comes when there is a bigger depreciation hit. This usually occurs most often with luxury vehicles, which also happen to have expensive maintenance schedules. For the DIY enthusiast, they also tend to require special tools (which add to the cost of service) in addition to the parts themselves being more expensive. Service costs are also affected by location, which can drive up prices significantly. Generally, leasing vs buying is a very different conversation between a new Toyota Camry and a new BMW 340i. In my research, it was rarely worth leasing a standard vehicle, but it made sense to lease luxury cars given how expensive their standard maintenance can be. For sure you can find parts cheaper online, buy the special tools once, etc., but not everyone is a DIY hero that has a professional grade scan tool and a random assortment of tools made solely to service these German vehicles. Major service for a luxury car can cost several thousands, and anything engine related can easily set you back over $5k. And generally speaking, the luxury manufacturers seem to actively make it difficult for your to work on your own car (by not having jack points for a floor jack, or requiring a special screwdriver to remove a panel, for example). At the end of the day, however, the best deal is the best deal. Sometimes the leasing incentives are better, and sometimes the financing terms will work out best. You really have to do your own math based on the offers you have to figure out if you are saving money in the long run.

@RacingS2000 Год назад

So that means if you buy a BMW you are screwed?

@simplereef4854 Год назад

@@RacingS2000 If you are poor, then yes. If you are upper-middle class or above, then no.

@EM-cz4rd Год назад

One very important factor has not been mentioned. If you lease a car, you shift the risk of the future value of the car to the leasing company. If you get into an accident, even if it is not your fault, this will substantially reduce the resale value of your car. If you are leasing, this is not your issue. But if you bought the car, it is a big deal in this calculation.

@matsudakodo Год назад

@@EM-cz4rd yep. So at the end of the lease you compare the current market value to the estimated residual value on the lease agreement. If the contract price is lower than the current value, you can buy it cheap, or trade up to a new one with no money down. You are under no obligation to buy if the current market value ends up being lower.

@441meatloaf Год назад

@@EM-cz4rd Also you do not shift the risk of future value. Leasing company tend to hold your residual value higher to protect themselves from the very situation you are talking about.

@gamingsaint6238 Год назад

It really comes down to what condition of car you need, and your personal situation. Older reliable car bought outright is always best. But if you need a specific model and year finance. If you need to keep up with having a new car lease. Its that simple.

@Photoshopuzr Год назад

What i learned from people that got money and know how to keep money is you never buy any car that's not older than 10 years thats when all the value of that car is lost so you get your moneys worth. Cars are liabilities no matter how you flip it. I got to agree with that. :D

@cosmomontanaro5759 3 месяца назад

Why would anyone "need" a "specific model and year?"

@unsashamed Месяц назад

@@cosmomontanaro5759 having piece of mind w/ the condition of the vehicle is what most ppl say. not sure how valid it is buttt

@michaelclennan8425 Год назад

As a cpa and cfp, great analysis. In reality most car buyers are so confused, purchase is an emotional purchase not rational. The seller wants confusion.

@BR-gz3cv 2 месяца назад

Spot on. Most vehicles- especially new vehicles- are an emotional purchase. As a former ad exec, the money poured into car advertising is staggering. That’s why car ads have beautiful models, pefect traffjc free mountains, or stylized graphics and music- with very little data or information. “The mind will justify what the heart wants.”- that’s the car industry in a nutshell.

@jmc8076 2 месяца назад

@@BR-gz3cv Applies to most of our world now incl politics and healthcare. Follow the money.

@RichFlair310 Год назад

When comparing lease to purchase, you can also include the residual value of the lease and can capture the delta between residual value and resale value - lots of companies will give you cash to buy your car out at the end of your lease

@rodger7029 Год назад

😂😂😂😂

@tommieboi707 8 месяцев назад

This is false! I absolutely cannot believe how many scammers are in this comment section. Beware of these fraudulent statements. Pretty sure half these people make money from leasing ehich is why they are here spreading false info.

@seek8140 Год назад

Great comparison on 36-month timeline costs. However, if you extend out the length of time (48+ months) lease vs ownership, the numbers will greatly skew toward ownership.

@PanteraRossa Год назад

Not necessarily, because a car will have significant drop in resale value with each passing year, AND you have more risk of expensive repairs lowering its resale value further the longer you own it as older cars break down more. I think the examples given are highly speculative and not reflective of real world data but at least you have an idea on how to setup your own spreadsheet and input more appropriate numbers on your own.

@rodbutler4054 Год назад

Bying a vehicle with a good maintenance value will save money over a money hog.

@OscarZheng50 Год назад

Owning a vehicle longer will depreciate the value of the vehicle more which you don't have to worry about when leasing. Also, accidents and repairs will further decrease resale value and that is more likely to happen the longer you own the car and resale value is the only thing going for financing or outright buying vs leasing so owning a vehicle longer would make the cost incurred longer than leasing thanks to depreication

@mjayamamoto 11 месяцев назад

Depreciating the value of the car is actually a good thing if you’re in it for the long haul: lower insurance and registration fees, and my cars have been lasting at least 18 years with few problems.

@jwthompson9571 9 месяцев назад

Pay cash for a pre owned car coming off a lease is the best option…

@David.D3 Год назад

This video taught me that these calculations keep people who lease cars to keep leasing and keep having a monthly payment. They continue their leasing behaviors because of opportunity cost,low maintainence cost, no hassle of selling the car is justified. People like me buy and keep their cars long. No monthly payments, lower insurance and registration costs.

@vincentortega4284 Год назад

David D I also buy a car like you. Buy it used, no payments; invest the money that would be payments.

@robocop581 Год назад

People that lease are paying prime depreciation plus interest. Depreciation occurs the most in the first five years and car dealerships will charge the renter accordingly. Leasing might seem affordable the first time but after two or three leases you realize you're throwing money away. Same logic as a person renting a property as there's no built up equity, just money thrown out the window every month and after the life of a mortgage which is 25 years renters have nothing to show for

@David.D3 Год назад

@@vincentortega4284 When I was younger and stupid, all I did was finance crap. Now I'm older, my used cars are paid off, have a home, and use the money i use to waste on monthly payments towards investments as you do.

@paulklp8262 Год назад

There's pros and cons to all methods. Leasing is better for high-income earners cause the monthly cost is negligible. For enthusiasts, financing a dream car is the best way to get their hands on it the quickest because the value of enjoyment exceeds the interest premium.

@vincentortega4284 Год назад

@@paulklp8262 financing a depreciating car is not what high earners do; it's foolish. Invest that money.

@mariusmocan8491 Месяц назад

Bought a brand new Toyota corolla S cash in 2006 for $18,000 and about 8-10 years later with about 200,000 miles on it someone hit my parked Corolla and totaled it. Insurance paid me over $12,000 for the car. Bought a new 2018 Honda Civic Hatchback Sport for $21,000 and financed it at 1.99% and quickly paid it off in 3 years. 3 weeks ago after 6 years of ownership and 60,000 miles plus on it. The Civic was totaled due to flood damage by my insurance company and they gave me about $20,900. Moral of the story. Only buy Japanese cars that keep their value meaning Toyota and Honda products. Try to buy gently used or dealer certified used and drive them til the wheels fall off and it's hard to lose money with Honda and Toyota. Both of these cars I've owned costed me pretty much nothing to own. Changed the oil, 1-2 sets of tires each, oil changes and windshield wipers. Don't lease a car, it's a huge financial mistake since you have no equity in it even though you're making payments (same reason why not to rent a house). American and European cars are unreliable and lose value off the lot.

@Ferocious923 6 месяцев назад

I just have to applaud your content ma’am, well done. I remember having a consultation with a financial analyst last August, and it was incredibly insightful. Can’t stress enough how helpful experts in this field are!

@Ferocious923 6 месяцев назад

As long as you diversify your portfolio, any single stock or investment that you own shouldn’t have too much of an impact on your overall return. If it does, diversifying might be the right choice for you, as one can also try out other commodities. I now have a balanced portfolio that is yielding me profit thanks to guidance from Jonas W. Herman.

@Ferocious923 6 месяцев назад

Hermanw jonas (a Gma!L Is he taking commissions for his services? Yes, I’m I still making money in the process? Hell yes!

@Fleneroy77 6 месяцев назад

I started working with Jonas back in June, and my financial goals have never been clearer. It’s like having a strategic partner for my money with a solid track record.

@Rmorales799 6 месяцев назад

Thanks for the advice, both of you. It’s reassuring to hear positive experiences. I feel more confident about moving forward with Herman now. I just shot him a mail. Thanks for sharing your experiences!

@darbyheavey406 4 месяца назад

14 minutes to explain a 2 minute concept. She still gets it wrong.

@WHERESSS Год назад

one very important consideration that is left out here is the buyout option(residual) on mostly all lease contracts. This can be the deal maker or breaker. If the market value of the car at lease end is lower than the buyout, you can walk away. If vice versa, you can buy it out and pocket the difference. Same concept as options trading. However, with a higher residual, your payments will be lower but the chances of you having a chance at a profit at lease end is lower. Pluses and minuses to both, but it can significantly effect this calculation. With consideration given to lease end buyout, leasing is basically a hedge against a set depreciation. This is the biggest advantage to leasing.

@matsudakodo Год назад

Good thinking

@aschiu20001 Год назад

Excellent point. Hedge on the downside and potential much larger gain on the upside - exactly what is happening to many up and coming expiry right now

@Twobarpsi 9 месяцев назад

Excellent advice.

@nextuser1 9 месяцев назад

I am confused I fail to understand your comment. I assume that at lease end the value of the car is lower than buyout. Why would it be higher? And how would you pocket the difference?

@corujariousa Год назад

Thanks for the video! Yes, this is a confirmation of a conclusion I've made a while back. Once the used car market goes back to the norm (nowadays it is overpriced), the best financial decision in terms of car purchase is to buy a good condition and reliable brand/model used car and keep it for many years. Maintain it adequately but not necessarily following all manufacturers recommended maintenance (only the critical ones. I.e: Timing belt replacement, etc.). Make sure oil changes (fully synthetic always) are always timely and good gasoline is always used. This should keep expenses to a minimum and have a headache free car ownership. I have been doing this for decades and the process never let me down.

@kennethguerrero6802 Год назад

All of those maintenance costs and time taken to take care of the car does not equal headache free. All cars of every brand and model have a new issue specific to that year and make. Cars are the most depreciating asset of all time. There is no value in a vehicle. Leasing is the best bet considering you could make money after lease end when given the option to purchase and there is rarely ever any need to waste time on maintenance or wear and tear

@corujariousa Год назад

@@kennethguerrero6802 I completely disagree with your assessment. Starting with the base assumption "All of those maintenance costs and time taken to take care of the car". If you start with a good purchase and follow the steps I mentioned, maintenance is very low cost and effective. The time to do it is almost negligent. Lease is more convenient for the ones who want to always be driving a new car but is definitely not the best financial choice.

@kennethguerrero6802 Год назад

@@corujariousa you should look up the average maintenance for every model of car over a 6 year span. The longer you own a car the less valuable it is. You can assume your car will never give you problems because you “take care” of it. But everything wears down on a vehicle. You will always have a problem over a long enough span of time

@corujariousa Год назад

@@kennethguerrero6802 True statements but under the conditions and process I mentioned those expenses are way below the cost of leasing over the same time period. Again, I've been doing it for decades and it hasn't failed me once. I do recognize not everyone would be like me and most people buy cars not based on reliability but in terms of looks only. Also, many people fail to take minimum adequate car of their vehicles. All my vehicles look almost new after 7-10 years of use. So much so that I have many times been offered good money on leaderships, given the inflated used car market and the profit they see they can make with my cars. And I do not "baby" my cars. I just do not treat them as something disposable.

@kennethguerrero6802 Год назад

@@corujariousa hey if you just want someone to affirm your beliefs, youre good to go. The information is out there is you want to learn more. This accountant left out alot of details that a financial expert should not leave out about the process

@ashnader8627 Год назад

I was told that lease payment is based on projected value of car at end of term .. so if you are adjusting resale value, maybe you should adjust monthly lease amount.

@xinbaoyu3086 Год назад

True

@BigD481 Год назад

One other factor to consider is whether rebates are based on how you choose to pay for the car. When i offered to pay cash , dealer said i would lose one of the rebates if i paid cash. Obviously this was many many years ago when cars were routinely sold way below MSRP. So instead of paying $25000 cash for the car , i financed it for &23500. I then paid it off after a couple of months. Sure i paid interest on those two months but i came out way ahead by financing and paying of early than buying cash.

@TechDeals Год назад

Great video... my only issue is that you're comparing 36 month leases to 36 month loans. Almost no one does 36 month loans. Run it again with a 72 month loan at 4.99% interest. Financing is still cheaper than leasing most of the time, but leasing is less hassle on the back end, just turn it in and move on.

@housepianist Год назад

I think the concept of owning a car with other people’s money is a bit misleading. Whether you finance or lease, you never own the car. But, as stated, there is greater freedom to do more with your car if it’s financed since the dealership no longer has any vested interest in the vehicle because they don’t own it. But you’re still driving someone else’s car, a in a sense. However, to help minimize any depreciation from buying a car with cash, never walk into a dealership and tell them you want to buy a car for cash. They can easily pad hidden fees and cost into that because they know they won’t be able to maximize their profits through interest. In cases like this, it’s best to negotiate the best price (not monthly payments) you can for the car as if you were going to finance. Once you have the figure you want, you can then tell them that you want to pay cash. They may not like that but that could potentially help to minimize any depreciation once you drive it off the lot.

@thecorrectoification Год назад

Life hack 🤘

@cacinaz8802 Год назад

When you lease you want the residual value to be higher because that forces the payments down, especially if you do not plan to buy it at lease end. If you lease it for business purposes, you can deduct the lease payments. If you purchase you can depreciate a good chuck of it up front (section 179 if that still applies) if it is a business vehicle, but you can only deduct the interest on the loan if taken.

@BetaProductionz Год назад

One thing you didn't consider was increased cost of insurance between lease/finance and owning. If you lease or finance a car you are required to buy comprehensive car insurance (covers damage to your car) vs just liability insurance (covers damage to other party) if you purchase outright. Oftentimes, comprehensive insurance is 2X the cost of liability insurance and can add significantly to the total cost of ownership. I own my car and only pay for liability insurance, choosing to pay out of pocket for any damage to my own car.

@fazilm1 Год назад

And if that cost is prohibitive, i.e very expensive or if the car is written off, then what??? Pay out of your pocket to replace it???

@chrisbullock6477 Год назад

Yeah, but I think its obvious for the person who has the money to walk in and purchase what they want. For the majority, they are used to just having to pay and have full coverage anyway.

@baconblaster6422 Год назад

If you car gets stolen that is gonna be brutal

@BetaProductionz Год назад

@@fazilm1 yes, be a safe driver. If you do total your car, be grateful for surviving the accident and this of it as an opportunity to treat yourself to a new car. If you follow normal financial advice of having 3-6 months salary as an emergency savings then you can buy another. As long as you’re not having total loss accidents too often the money you save on insurance is more than that of having to buy another car. And if you are having so many total loss accidents then your insurance is going to be super expensive anyway… You don’t ever come out ahead with insurance.

@BetaProductionz Год назад

@@baconblaster6422 I agree this is real concern for people living in certain areas.

@annonemus21 Год назад

the opportunity cost only matters if the money you invest has a higher yield than the interest charged by the financial institution.

@crazycdn8327 Год назад

And the interest is greater then inflation. Instead your giving worthless cash for a semi less worthless depreciating "asset" in the vehicle. At least if you were to sell it in a few months you would get inflation adjusted dollars in most cases (so the depreciation would be slightly less).

@sws212 Год назад

@@crazycdn8327 A depreciating asset only matter if you *actually* planned on selling it within a reasonable period or expensing it as depreciation through a business. Most people don't buy a car to sell, they buy to have a car for them and their family to drive around. If you're looking at a car from a depreciation point of view, you need to minimize costs and get an old 2002 toyota or whatever. Otherwise, the argument is only whether or not you value money in your hand vs paying it upfront.

@eds464 Год назад

@@sws212 Finally! Eveyone keeps talking depreciating and while I understand that's true it's only relevant if you don't plan on keeping your car. Eveytime I have a conversation I have to remind people of that.

@SacredCASHcow Год назад

yup. if you are a by profession equity trader for example

@chowsquid Год назад

And sometimes life happens…

@jacqueskavafian4179 Год назад

Your calculation has a major flaw. If you lower the residual (resale) value of the car to 30K from 35k, the monthly leasing cost goes up by $138.89. I have done the math two million ways and leasing is always the better option. You can always buy back the car at the end of the lease term if one wishes and during the leasing period one can earn a return on the money. Also, are you adding the sales tax on lease payments? In many places there is sales tax on lease payments.

@painfullyaware5221 Год назад

When you lease you often have the option of a "one payment" lease, which would subtract the payments from your calculations. That would put leasing on a financial par with financing, I think.

@osirismarbles5177 6 месяцев назад

Not sure if this was mentioned or not, but the other thing to consider (at least in the US) is insurance requirements on a financed car. Banks typically require full coverage for a new car that they are fronting. Buying cash, you might have cheaper insurance options. What the difference between financed insurance versus cash insurance options will vary but worth considering.

@debbielockhart7762 6 месяцев назад

If I pay cash for a new vehicle (which I wouldn't do - I'd rather buy a good used vehicle and let someone else eat the depreciation) - no way would I be looking to under insure or cheap out on the insurance options.

@andrewchandler0 Год назад

This year seems slow , especially financially 😔 I feel like inflation is affecting majority of us God will help us 🙏

@Tomtownsend485 Год назад

It's a delicate season now, so you can do little or nothing on your own. Hence I will suggest you get yourself a professional that can provide you with entry and exit points on the securities you focus on.

@robertosaviano215 Год назад

Very true! I've been able to scale from $350K to $650K this red season because my FA figured out Defensive strategies to protect my portfolio and profit from this roller coaster market.

@andrewchandler0 Год назад

@@robertosaviano215 Please can you leave the info of your investment advisor here? I’m in dire need for one.

@robertosaviano215 Год назад

@@andrewchandler0 My advisor is ‘’Isabel Cecilia Ramsey’’ she’s highly qualified and experienced in the financial market. She has extensive knowledge of portfolio diversity and is considered an expert in the field. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market

@elliot985 Год назад

@@robertosaviano215 I just looked up Isabel Cecilia Ramsey online and researched her accreditation. She seem very proficient, I wrote her detailing my Fin-market goals.

@atomiconnection Год назад

Good video. I liked it because my decision to finance my vehicle in today's climate was reinforced. The insurance companies charge different premiums depending on whether the car is leased or financed. I think this is a hidden cost in the decision-making process. I believe you are more likely to take better care of your vehicle when it is financed.

@danschwartz1950 Год назад

Whoa! Been writing auto insurance for 50 years with multiple companies. There is no difference in cost of insurance if you are leasing or buying. That being said, gap insurance is optional and should be considered depending on the amount of down payment. Leasing companies typically include gap insurance in their lease and you should not be paying twice with an insurance company. Whether buying or leasing ALWAYS ask if gap insurance is included.

@famousamos1 Год назад

You’re most likely to take better care of your auto if you buy it in cash vs finance!

@Monster-Abee Год назад

Taking care of things is a character trait. You either will or won't.

@famousamos1 Год назад

@@Monster-Abee true to a point however if you sink in your hard earned money into something you usually also will take better care of it. Financing you aren’t fully invested with your hard earned money yet. If you pay cash $10k+ usually that’s enough amount to trigger your brain that I just spent a lot of my hard earned money on something!

@cerebrumexcrement Год назад

@@famousamos1 that probably explains why i hear folks complaining constantly about how they totaled their car but still have to keep up with the payments.

@SHOT_GUNNER Год назад

I purchase all my cars outright. Never purchase new. I can’t possibly wrap my head around someone wanting a mortgage payment for a car loan. If you can’t afford it outright, don’t buy it. That’s a huge issue for most folks. They want to look good/cool and they don’t own the car until a 3-5yr period. And they have lost 50k dollars. Geesh that’s crazy. Great video.

@Alfredinni10 17 дней назад

Thank you, perfect explanation

@josephjames259 Год назад

Pay cash for a reliable car. Use the $ you save for investing, etc.

@hschofield82 Год назад

So cool! Love the spreadsheet you used to encapsulate your summary. Great information for folks wanting to change cars every few years. I think if you extend the ownership horizon to 10 or 15 years, it will become quite apparent that purchasing (either by finance or by cash) becomes considerably less than leasing.

@SyrupCanuck Год назад

Good luck finding a car that will last 10+ years without major parts failing.

@BF_official_my Год назад

@@SyrupCanuckmy secondhand car is almost 20 years, with me driving for the past 10 years, still working but it requires one major repair so far.... overall still worth it then purchasing a new vehicle...

@financenumber2953 Год назад

@@SyrupCanuck really? What an immature comment. Most of the modern cars easily last 10 years without major issues unless you bought a lemon.

@SyrupCanuck Год назад

@@financenumber2953 other than Toyota maybe what? So many expensive parts on vehicles now. I just saw a late model subaru forester with burnt out fog light and it was at least a 2020.i saw new Ram trucks with burnt out led lights. Those are sealed units and cost a ton. That's what I meant when msot new cars are junk. A few parts go and bam you are in for an exspensive ride.

@victorsong8416 Год назад

@@SyrupCanuck WRONG. I have a Mazda Miata 2006. 70K miles. No parts have failed. None. Just regular maintenance (oil, tires, brakes, coolant). That car is now 17 years old. I'm light years ahead in $. I know Miata owners, who are pushing toward 200K miles without major repairs. If it's stick, I can have an engine replacement on an NC for well under $4K. The manual tranny will last until doomsday; might need a clutch for under $1K - which will last 100K miles.

@leje-zj4dr Год назад

I could split hairs on how low that opportunity cost is, but I’m just glad it was included. The only flaw I can see is the payments in the financing option have to be discounted. Today, that discount rate would be enormous

@viacheslavfedunov111 Месяц назад

Do the comparison of buying used and leasing a new one so people can understand. In my opinion the best thing is to get like 3 years old car which already dropped it’s value but has only like 30k miles on odometer. And go from there. I like to buy those in cash, so I am also not forced to pay for full coverage. And also you can get the credit card from which you buy a car and have 0apr for 18 months. Those are the best options in my opinion

@masatookumura9861 Год назад

This is great! Thank you! The minor thing I would add is the difference in opportunity cost between three. I mean you out for the cash purchase. But there is a difference between leasing and financing. With leasing your have more cash left for other investment. That is a pro compared to finance. Anyway, great analysis. Thank you.

@chowsquid Год назад

Wonder why leasing didn’t have that opportunity cost bonus in the video.

@edwarddolejsi1489 Год назад

I've been leasing cars for years, paying at most 1.9%. I even had one term at 0.9%. I am driving Subaru cars financed by Toyota Finance. My dealer continually adjusts the residual value to the market with some discount and applies the difference as a cash down payment to my new lease. I go for two-year lease terms and almost always exceed the km quota; however, since I am always leasing from the same dealer, I have never had to pay the overage km charges. The other advantage of a short lease is the low maintenance cost and 100% warranty. I gladly leave some money on the table for the dealer selling my return car instead of all the hassles of selling the car privately. It's interesting that the financing interest in your example is less than the lease interest.

@bishop4077 Год назад

That's not uncommon with some manufactures to have higher lease than finance rates. FIAT Chrysler though is notorious for this for some reason.

@MarianoLu Год назад

Jeep Wranglers have a high resale value compared to other cars that is what drives the higher cost of lease. Remember than in leasing the APR that is shown is hiding the residual value they are calculating for the car.

@greatpix Год назад

I've been leasing cars since 1993 and, for me, they are a much better deal than buying one because I drive less than the (usually) 1,000 miles a month most leases state and that means when I've gone in to at the end of the lease to lease a new car that the mileage equity I've built up covers and down payments for the new car and all I have to pay is the first month's lease payment (incl sales tax) and license fee. I also take advantage of manufacturer's lease specials to further reduce monthly payments. That way I get full warranty during my lease, get a new car every 36-39 months with all the latest safety features, etc. A lease is NOT as good a deal if you put more than the monthly mileage allotment on the car.

@Lambert7785 Год назад

(3:26) - just going up to this point, it looks like the costs are similar - but I notice you are not considering the loss of passive income from paying cash (50k @ 5% x 3 years = $7,500 +), and also, if you paid cash for the lease, this would reduce the payment, and then also leave say $30k for passive income, or $4500, making leasing a far better option...- yes? - just taking a quick shot at it, could very well have missed something :)

@sydneylee6145 Год назад

One thing that is missing in the discussion of opportunity cost is the tax implication. Investment income is subject to income tax. Depending on your tax bracket and income type, it could be more than 50% of your investment income .

@robocop581 Год назад

Exactly

@thecorrectoification Год назад

@@robocop581 Murphy?

@chowsquid Год назад

Only if you sell or have capital gains or dividends in the US. If not, there’s no tax. Adding this factor would make this crazy complex because of how many permutations you can have.

@AbleMable Год назад

@@thecorrectoification lol

@Truthhurts808 Год назад

What option did you choose for your car? I am still driving my 2004 car which is still going strong…perhaps a new one soon! Not a Jeep though 😂.

@ScotiaDroning Год назад

In Canada, if you have a business, you can expense the cost of a lease and only write off the depreciation of a financed purchase and interest costs. Leasing for certain circumstances is very advantageous. You also have to consider that while you lease the vehicle is under warranty, without buying an extended warranty for a financed purchase.

@traderpete007 11 месяцев назад

The big difference comes the minute the car’s warranty expires. If you go beyond that 36 month period, in a loan or purchased car you may not have a payment anymore, but you likely have the heaviest maintenance and repair costs where with the lease the car is gone after the warranty is up and the only maintenance you’ve done is $30 oil changes. Additionally if you use for business it’s much easier to expense vs depreciate

@mariamhashmi3599 Год назад

this has nothing to do with the video but gabrielle I need you to drop your skincare routine!! You look AMAZING

@GabrielleTalksMoney Год назад

thank you 😊 maybe a future video on budget skin care tips 😀

@atombomb6719 Год назад

I concur She's beautiful 😍

@AAG981 Год назад

@@atombomb6719 i concur too

@leovia719 Год назад

Totally agree!!

@isaachuntt Год назад

Genetics 🧬

@chadedwin Год назад

These calculations are innaccurate. The resale value of a leased vehicle is '$0' as result of not owning the vehicle. Those payments for the lease do not incur equity due to not having an asset. Cash or Finance, creates equity from the asset of the vehicle due to ownership. "For Educational Purposes" The best option - negotiate a lower price via financing, though ensure there are no clauses in the contract that incur early payoff penalties, and then payoff the loan within a month of finance.

@nah2osurfer Год назад

Also worthy of consideration is the cost of insurance. When you lease, you need to insure the vehicle for higher limits than you might if you were to purchase the vehicle either through finance or buying it outright. So insurance isn’t necessarily the same cost for leasing vs. purchase.

@CJ-vh2hf Год назад

It is possible with the proper credit worthiness, personally, I usually never let the car dealer do the financing for me at least initially, I go to the credit union or bank secure my loan, and correct interest rate prior to corresponding on price with the dealer.

@JacOnMac 5 месяцев назад

Yes my dad taught me that trick use a bank line of credit it’s like paying cash and you get the title that way instead of financing w the dealer where it’s still their car until payment #60.

@wmaradei Год назад

When leasing, don't you pay less taxes&fees as you are pay them monthly, and after 36 months you have paying only a fraction of the car? So you only pay taxes on the amount of the car you bought, in your example $18.396. Whereas in financing, you pay taxes&fees on the full amount: $43.290. When leasing, numbers change also whether you decide to exchange the car, return it or buy it at the end of the lease (this video's calculations seem to be for the 3rd option).

@LilyBecca Год назад

Isn't the rate usually lower when you lease? Plus, you don't have to pay for repairs because it's still under warranty. The monthly payments are significantly lower. If you can write it off, I think leasing is the better option, especially if you plan on getting a new vehicle every few years. I would just watch the down payment on the lease, and remember that it can be negotiated.

@kamansari2618 Год назад

There is a fundamental error in assuming that in the assumption that the lease rate remains the same if the lease end value drops from 35k to 30k. Leases are always calculated based on vehicle selling price less lease end value plus overall interest over the lease period. This will mean that the the 5k difference will have to be distributed over 36 payment or add 5k to the overall cost and so the leasing option will be once again the most expensive option.

@LAArt Год назад

at 7:04, we see $511 monthly lease - for both resale options. This is impossible. The higher the resale, the lower the lease payment. Leasing is literally paying the difference between capitalized cost (MSRP-rebates-down payment) and resale, plus interest.

@janaemerson3344 Месяц назад

Never heard of an opportunity cost. No one’s ever mentioned that before. I do not understand what that is and why should someone be penalized for paying outright for it

@BenjaminHsuperman Год назад

Nice breakdown, but I just really want to know where you go to have your car maintained for $25 a month.

@manisymone8622 Год назад

Hi Benjamin, I think Gabrielle is trying to explain to having at least 25 a month to save for (every day) costs that might occur. Tires, bougie, battery and other issues. So when those issues come up, it is not entirely painful to pay or downpay for the costs. Something I will definitely try with my next pre-owned car.

@PHILLIPS8822 Год назад

Your numbers are a little misleading on the percentage rates. Because everyone's credit is different if someone with a credit score of only 600, they can not qualify for those interest rates

@rah7207 Год назад

Adjust the numbers then

@pohump Год назад

So I won't lie, I just had this running in the background while doing other things but I noticed you used 1.99% interest for financing. No one is getting 1.99%. I have an 840 auto credit and I just bought a car at 6.2%. I have heard from others that are getting 6%+ in interest.

@jsprite123 Год назад

The opportunity cost is a big IF (it's up to you to invest it or not). Most people won't. Monthly payments HAVE to be paid, financed or leased. Insurance is not mentioned here. With financed you have to have full insurance (at least in the US). With leases, the lessor may or may not cover the full coverage, as the car isn't fully yours yet. As a big IF for insurance, if you buy the car outright you may only choose to have limited insurance coverage, thus reducing your overall ownership expense (This is up to your comfort level, of course).

@patricktang3377 Год назад

When your car is financed, the insurance premium will go up. You will end up paying more insurance if you car is financed than is paid off in full upfront. This additional insurance premium should be considered as a cost to finance. The accumulated increase in premium could be quite high over time.

@MrQuay03 Год назад

Could you give an example of how much would this premium be? Thanks

@paulklp8262 Год назад

@@MrQuay03 About $1-200 per year.

@441meatloaf Год назад

Not true, this depends on the individuals track record and the insurance company risk assessment. Financing is often less in premium because you own the vehicle. But if its a lease, your insurance have to deal with the leasing company because the title owner isn't you. There is often an additional cost to protect the title owner. Second, insurance premiums also depends on the vehicle you buy.

@johnhansen8272 Год назад

Really? Source for that? And why would that be true? The value of the car and the driver remains constant. Are you a bad driver?

@paulklp8262 Год назад

@@johnhansen8272 Compare two quotes for the same car, financed and non-financed.

@aslancpa Год назад

When the resale value is lower, the leasing company will increase the lease cost because you have to “pay” for that additional depreciation. You are leasing a larger amount so cost goes up.

@themartdog Год назад

The resale price is a prediction though, they almost always give you a buyout price that is lower than the car will be worth when the lease is up. So, you end up being able to finance the car for less than it's worth at the end of the lease and get some of that value back.

@aslancpa Год назад

@@themartdog you are correct. I should have said a lower buy-out price.

@krisevon Год назад

@@aslancpawouldn’t worry about. Leasing to own is never going to make sense if the goal is to incur the lowest costs.

@FMCTJR56 Год назад

@@krisevon except for leases that have occurred in last two years--residual values are upside down for the leasing companies for the first time ever across the board on all automobiles. Due to: parts shortages. This was first lease I ever had done and got extremely lucky on the timing of things. Now to figure out best use of equity in leased car: buy it or try to role equity into one more lease and not get fleeced!

@441meatloaf Год назад

@@themartdog This really depends, the lease buy out price is the residual value there is no alternative buy out price.......Dealers often set the residual value at a much lower rate when you lease vs if you buy then sell later at market price. You often lose as a customer in leasing because you are paying upfront rental fees you will never recoup and also dishing out additional financing cost or cash if you buy it out after. If you do the math if often cost you more than if you take the financing option.

@whittierlibrarybookstore3708 Год назад

Lets be a little more transparent. Both "Lease" and "Finance" are both car loans. When you finance a car conventionally you pay interest on the amount financed - when you lease a car you pay interest on the amount financed. How the interest is calculated is different on those two loan types but one should not be ignored because of stereotype advice comparing it to renting.

@nv0us Год назад

Thanks for your video. For the spreadsheet, Do you have a download or online link?

@roberthuntley1090 Год назад

One factor to consider - the dealer is incentivised to steer you towards a finance deal, since he earns commission on it (and any associated extras like Gap Insurance). From the buyer's point of view, this means that there is more scope to negotiate a better deal, since the dealer has more room to manoeuvre price-wise. Also, you can gain these benefits and then pay off the loan prematurely and so reduce the interest you end up paying a few months later.

@SomeGuyFromUtah Год назад

This is very true, although I'm glad it was not included as part of the analysis because it adds too many variables. You can get the best of both worlds by financing (while refusing things like GAAP insurance) and then paying the car off in the first payment before any interest is accrued.

@mevio4665 Год назад

Interesting and good point

@441meatloaf Год назад

Most vehicle are open loans anyway, but dealers don't really incentives for you to lease. yes they make commission, but they make commission regardless if you buy, lease, or cash. The only difference is if you finance it, there is more chances of them selling you additional warranty and other packages you dont need during the negotiation because the monthly pmts are spread out, the hit is lower. But dealers often want people to lease vs buying. This is why they often offer much lower interest rate on a lease than buy because when dealers get the vehicle back after 2-3 yrs, they can resale as a used with markups. This has been the case since covid where used/lease vehicle are selling for the same price as if its new.

@0ooTheMAXXoo0 Год назад

With car loans in the USA (as far as I have seen and used), you pay the same amount if you pay it off early as you do when taking the full time of the payment plan. You do not save on interest if you pay it early, you can only pay more if you miss payments, you never pay less than the full amount including the interest...

@cmonCraig Год назад

@@0ooTheMAXXoo0 that doesn't make any sense. If you pay the loan off early then interest hasn't accrued, therefore you've avoided paying interest. If you make the minimum payment each month over the full term then you're paying the maximum amount of interest. The selling price is the same, but the cost of interest is not.

@DruNicholsMD Год назад

The taxes and fees would be significantly lower on the lease compared to the financed purchase option, as the taxes are only calculated off of the purchase price minus the residual. Also, using a promotional interest rate for the purchase option further skews the results in favoc of the financed purchase option.

@441meatloaf Год назад

Finance is always the better option regardless. This topic has been debated many times, you lose money when you lease.

@johnh8268 Год назад

Agreed on both points. I'm surprised she missed the lease tax difference.

@dippitydoinit 11 месяцев назад

I'd like to see a more realistic comparison based on monthly budget. Say $500 or $600 dollars a month. Also, the value of the vehicle at the end of the lease is negotiated at the start of the lease. Some people got real lucky when their buyout came up for option when rates were low and used prices were high.

@tfewald01 Год назад

You mentioned being able to keep a purchased car after payments are finished (as opposed to leasing), but I think this could have been emphasized more. I've had my (inexpensive) car for 10 years, and it's still going fine. Think of all the years of payments leasing would have cost. If having the latest and greatest is important to you, then leasing might make sense. But if you just want transportation, leasing is foolish IMHO.

@hxhdfjifzirstc894 Год назад

In short, leases are for shallow morons, who will never become rich (because they can't handle their money wisely).

@DurpenHeimer 11 месяцев назад

you can finance the residual value of the lease at the end of the contract. if the residual value is lower than the standard purchase price of the car with the same amount of wear, then financing your leased car after the contract is a good idea

@randy74989 Год назад

Leasing is a trap. When you turn it in they will knit pick you to death on dings, scratches, etc. So, it's not simply just turning it in. And, you should never lease unless you own a business and you better not drive it more than the annual allowed mileage. Maintenance is on you, as well and that includes tires, which usually don't last two-years (OEM tires). Dealerships are not in the business to give you the best deal, that is up to you. If you don't care about the cost and like a new car every two or three years, then lease one and don't worry about the cost. Cars are a depreciating asset big time, so the cost of ownership is up to you. Do you take care of your vehicles or just drive the wheels off of them. If you take care of your vehicles and you buy a reliable vehicle, then buy it. Finance it for 36 mos. (20% down minimum) and if you have the money, pay it off in 12 mos. This gives you time to appreciate the vehicle or hate it. And, Good Luck at the dealership, they are sharks in the water, and will take you for a big ride. Don't believe me, then go watch The Homework Guy (THG) on RU-vid and learn.

@LLD1992 Год назад

Stumbled acrossed this video and absolutely loved it. You explained everything so well and enjoyed how informative it was. Subbed!

@chrisbarrett8817 Год назад

Great overview - from an accounting perspective, for the first 36 months. Lots of comments that are valid; there is not a single answer, as market conditions, finance company terms, and the buyer’s personal situation are variables. One point to consider: lease costs are a rental charge + pay down of the depreciation during the term. The higher the residual, the less depreciation is included in the payment. The example comparing 35k residual v. 30k residual did not reflect the payment difference. Another point is that the lease capital cost allowance (shown as the starting vehicle cost) is based on the Retail pricing from the seller. The residual values shown in the example, likewise, show the used vehicle resale value, and appear to also be retail (what an individual would reasonable expect to pay) while lease residual values are based on the predicted future wholesale value of the vehicle. This creates two major gaps that can be very material: the retail to wholesale margin for used vehicles (which is much larger than for new vehicles) and the difference between the predicted residual value and the actual value 36 months later. In some cases, that difference can be worth thousands or even tens of thousands in your pocket.

@danielhovan6607 Год назад

I am doing novated lease. My insurance, registration, servicing, roadside assistance and fuel are all covered. Makes a difference with fuel prices up.

@jennyhwang3260 Год назад

Customer never wins. Car dealers have figured this all out already! That’s what they do😢 They have thousands of ways to trick you😮

@codelessunlimited7701 Год назад

It's inflation, car dealerships are taking advantage of it. But in reality it comes down to the money printing press of the Fed and the government is getting bigger it means the budget and liabilities are also getting bigger for the taxpayers to support its obligations.

@esparda07 Год назад

Financial-wise NEVER BUY A NEW CAR...that's it. Buy a used 2-3 year old car and let the first owner take most of the hit on depreciation. If you're not comfortable then do it from a dealer. Still better than buying a new one outright.

@tracyc.1005 Год назад

Interest rates are higher for used cars and new cars have don't have problems. Certified Pre-owned cars aren't much cheaper than new. I don't worry about depreciation because the purpose of my car is not to sell it but to use it to get from point A to B safely and reliably EVERY single time which is important for work and family. I only buy new cars... but I've only had two cars in my whole life; 2005 Toyota Corolla and 2013 Hyundai Azera which I drive now.

@jx4026 Год назад

for current car market, new car is better choice

@tenzinthutop Год назад

These days 3-4 year old cars more expensive than new car.

@pavelbuchnevich1229 Год назад

@@tenzinthutop Not really, I just bought a 3 year old Toyota RAV4 Hybrid (2020) that is more than $8k less than a new one (2023).

@pauld3327 Год назад

Buy It New or buy it 2-3 years, but maintain It and keep It until It dies

@myusrngml Год назад

My take away is buy an ebike and use ride sharing and car rentals when you need to do longer trips. Please do comparison off that. The monthly 300+ associated with owning, financing, leasing a car is really steep especially on a depreciating asset.

@stephencharles6932 Год назад

Unless I missed it, when financing/leasing you still have to add the 'opportunity cost' as you still have this core money to invest 'rather than buy the car outright) and you must also allow for it to reduce as you make your monthly payments. I think you probably assume for this model that the buyer does not have the cash to buy outright then? In which case just two options available. But if you do have the cash then it changes things considerably.

@christachase9000 Год назад

I would love a copy of the spreadsheet you created so I can put my own numbers in. Is that possible?

@jamesng2764 Год назад

Im searching for a car now, informative info Thank you

@davidwilliamson8502 7 месяцев назад

It all depends on rebates. Sometimes leasing is better, sometimes financing is better. And don’t trust an accountant when it comes to cars, trust someone who works in the industry.

@steviewonder275 8 месяцев назад

if you have not already, another good video to do (similar to this one) is the one about buy or return a leased vehicle after the lease expires. good job.

@applepieclub5012 Год назад

This video was recommended to me and I’ve always been curious about this subject. Let me just say, you explained it really well! I never lost interest while you were explaining the numbers. You’ve got a great presentation style. It’s professional but it’s not condescending. It’s like you’re talking and explaining to a friend. It’s nice to see financial advice from a fellow Canadian.

@idontevenknow232 Год назад

Leasing is a pretty good option nowadays IMO. Cars are becoming more and more expensive to repair. Not just engines/transmissions but all the little electronics cost a fortune. Labor costs a lot as well due to how complicated cars are and how they're packaged, eg putting wear items in very inaccessible places and requiring techs to disassemble more things to get to the part they need to replace. Things to think about if you're financing a brand new car and expect to drive it way past the warranty period.

@chadedwin Год назад

Leasing - or should we say "Fleecing" - thank you Dave Ramsey - is 'never' the best option. When financing a new vehicle, you will receive warranty protections, therefore you will have, e/.g.; engine/transmission covered. Typically, individuals will not travel more than 10-15K miles per year, and the warranty will be retained for the initial 3-5 years. The "Only Exception" to leasing - if you are having the vehicle under your business (that has a C-Corp, or other LLC-type registration) - where the mileage may be well above the averages where the warranty expires early. These are only suggestions, though use your best judgement. Keep in mind, the dealership does not need to resell you the leased vehicle at the end of terms - therefore those thousands of dollars are lost. For those that prefer paying a mortgage over renting, due to wanting to build equity - apply this same logic to your vehicle.

@feetincheseighths Год назад

The correct maintenance and service for any vehicle becomes more difficult by the year. Understanding your vehicles make and model history is a must. Dealer garage's will not advise you correctly on many levels. No vehicle will last changing oil every 10 thousand miles. Unless getting through the warranty period is your only goal. i have a vehicle that the owners manual says changing the transmission fluid should be done at 45000 miles. That's ridiculous. This vehicle needs new fluid every 25-30k miles. At 30k miles i called the dealer who refused to do the work saying i was supposed to drive it til it breaks. I think they were trying to get me to void the warranty by not having it serviced as described. No dealer wants to be on the hook for an expensive warranty repair if they can trick you into voiding your own warranty guidelines. There is an engine produced by Hyundai that has a terrible reputation of catastrophic failure. The 2.4 Theta Hyundai engine fails often. Maybe because fuel in the direct injection system fills the crankcase and ruins the engine oil causing the failure. Changing the oil every 3000 miles becomes a must for these owners, until they can get rid of the junk.

@idontevenknow232 Год назад

@@chadedwin Dave Ramsey is a buffoon. His advice is not really applicable for 80% of the population. Works for extremely high earners or reckless spenders who have no self-control, and not many in-between. He also masquerades as a Christian but acts and speaks like anything but if you look into him more closely. The reality is most people don't have 50K to drop on a car, so their options right now are to finance a used car at 8-9% APR and potentially inherit reliability problems, buy a beater in cash that may not get them to work reliably, finance at 4-5% on a 40K car note or get into a lease deal. None of these is really appealing, but the payment on a lease is going to be on par with the payment on a 5% 40K car note over 5-6 yrs if not lower. Renting a car is nothing like renting an apartment vs owning a house. Homes appreciate over long periods of time. After 8-10 years, most cars are ready for the scrap heap.

@AbleMable Год назад

@@chadedwin yup! building equity vs. flushing money down the toilet (leasing).

@SC-sf8xt Год назад

I think the finance payment over 36 months is very high. Most people lease because the monthly payment is affordable. I think financing 48 or 60 months is more realistic. But nice to see these comparisons.

@dimm0k Год назад

do you happen to have this spreadsheet available for viewing/download?

@vicgill1980 Год назад

Pragmatic advice from a pro. Thanks. Helpful

@tzetong9958 Год назад

I always lease a car instead of buying or fiance because interest rate of lease is not that much higher than finance.

@mkkravist11 8 дней назад

the costs for financing and leasing are annual, whether you keep the car or switch to a new car every few years - you keep paying. If you take out and pay off a loan for a car you get to have a fully paid off car in a few years, then nothing to pay. Ditto for cash, there's nothing to pay after that at all. Servicing is extra for all scenarios, as are things like tires and brakes etc with wear and tear. If you don't plan on replacing a car for a number of years, or at all, buying a car outright is the best option. If you just want a shiny new car, getting a lease is likely best, but you are under restrictions.

@christianjmyhre 2 месяца назад

What would you do for a vehicle that you plan to keep forever? I’m wanting to purchase a 4Runner (at some point) and I’m not worried about reselling it or anything because I’d be planning to keep it for life. It’s also around $50k and I’m exploring ways to pay for it. Willing to save a few years for it but exploring if there is a “better” way.

@CoolTies Год назад

Confused, if you're leasing and the residual is lower then the amount paid during the lease would be higher. Your examples have the “lease cost incurred” the same when there's a $5K delta between the residuals in your two comparisons. Your cost incurred should be $5K higher in the second example. Next, if your leasing as a business expense then a higher deposit isn't beneficial. Interest rates are a business expense. Even in the case of a car allowance. I don't think this is as accurate a video as it could have been.

@whatValuesDoYouLiveBy Год назад

Thank you for the video. Interesting study. I just wanted to say that the interest rate for Finance option is abit low. Maybe increase it up to 5-6 %. I live in North of Europe. Would be really nice to find 1.99% interest rate these days hehe. Also what is interesting is that leasing a car through your company will give you tax benefits.

@scastore84 Год назад

For Everyone that’s asking about where she is getting the 1.99%, I believe she used 1.99% because she actually states she is using the rates off of the Jeep website and that’s the promotion they are running at the moment. In the section of the video where she talks about the Opportunity Cost when buying with cash (around 4:58), she actually states that in the CURRENT market you can expect an average of 4-5%.

@joeysephora9777 6 месяцев назад

The other thing about leasing is that in some countries you can deduct the car maintenance, lease payments and other expenses from the income from your job, or in some cases the cost of the car can be withheld from pre-tax income. Of course, the catch is that there is a thing called FBT (fringe benefits tax) which is usually around 48% but this can be avoided in some states where there is an FBT exemption for electric vehicles.

@johnl7300 Год назад

I would have gone for financing if the interest rates weren't so high in current times. Nowadays, buying outright seems to be the best option if you have the means, since the other options are pretty expensive. Even getting a used car can be more costly than waiting for a new car.

@441meatloaf Год назад

But leasing interest also goes up regardless whether you finance or not. The leasing company is also base their interest rates on commercial loan rates. You only see a difference in % is because the dealer is making a incentive deal for you to lease vs buy during a shortage so they can have their vehicle back.

@peterpan408 Год назад

Cash buyers are also likely to balk at new car prices because they are aware of the opportunity cost. So they will buy an older model instead of new. Try comparing a $10000 cash car to a $60000 finance over 84 months. Choosing a prudent 36 months makes it look better than it is. Some of your assumptions were that the dealer didnt rip you trade value, sticker price, or interest rate. With cash you can buy it at a fair price from a private seller.

@dsauce223 Год назад

Any financial advisor will always say "hold off" on the purchase of a vehicle. This is because they have your financial interests in mind, and not your automotive needs in mind. They have tunnel vision. In the real world, we all need to drive something.

@derice7375 Год назад

I like this discussion.i tell you what ,as a car owner leasing or financing is a ripoff procedure.once you financing you gonna pay the car double price by dealer fee,interets and taxes.leasing a car ,is a better way if you could afford the payment without worry about mechanical issues.well all i suggest its better buying a car cash and avoid to be strangled by dealers,banks and insurance costs.i mean buying a car is a headache these days.peace and be smart.