Leasing Vs Buying A Car - Dave Ramsey 

I bought my own car at 20. I’m now 28 and still have the same Jeep paid off. Sometimes I think I want a new car but no car payment is so nice 😂

Been watching, listening, and paying attention to all of predictions and forecasts since early Covid. He hasn't disappointed yet 👌

I'm learning a lot from other people's mistakes

I financed a CRV 72 months when I was earlier in my career. The minute my income increased, I paid the car off two years early and started saving/investing the car payment money. CRVs last forever and have great resale value. I’ll probably have it another 10 years. Super low maintenance costs and extremely reliable.

That is probably the most calm I have ever seen Dave when someone asked about “should I lease or buy”.

Why are others trash talking people who already know they made mistakes and are here to fix them.

Man it’s always good to watch a Dave Ramsey video every once and awhile to keep you on the right path!

Listening to Dave is like listening to an awesome grandad.

I bought a car, paid it off in 4 yrs and drove it for 17 yrs total. So for 13 years I used that money to invest AND save up to pay cash for my next vehicle. In my opinion, people have a very expensive obsession with vehicles.

everyone being recommended this : Please keep in mind.. Dave uses a one size fits all approach to his advice and most the time there are better options for your particular situation. :)

Found this guy early in life. His info plus my being a nurse will hopefully set me up for success.

Try to remember something people, money will always come and go. Try not to obsess over it too much! Everyone is so concerned about percentages, decimal points, and dollar signs, and how much I’ll have when I retire at 65 or 70. Just stop….look around the world, and understand that one day it’s all going to be over anyway. Do you want to live your life obsessing over every quarter, dime, nickel, and penny you have? Or do you want to enjoy your life? Take care of your finances yes, but don’t forget to go live once in a while too. Just don’t put yourself in a predicament where you owe so much! Do that, and all of you will be fine. Have a great day 👍

The thing that was my epiphany was this... I would not have though twice about financing 40k to 45k. If I pay cash I would only spend between 10k to 15k. That is a big difference.....

My only regret is why I didn’t find Dave 10 years ago :(

That total purchase price really hit home. Wish I heard this 3 years ago.

Thanks Dave. Watching your videos talked me out of financing a $50k car

The only thing not mentioned that should be taken into consideration is maintenance costs on a used car. Depending on the person, and if they can't work on the car themselves, those amounts can add up. Should have been mentioned.

"Broke people ask how much down and how much a month"......"Rich people ask how much" I Love Dave Ramsey

Dave is spot on. Do not take financial advice from broke people. Period. 😊

I am not a fan of leasing, but if you are way under the mileage limit and it has been a great car so far, buying out the lease may make sense, especially if you can pay cash.

I have never owned a car past 20,000 miles. And the only reason I’ve leased cars is because I’ve been working in the automotive industry for the last 8 years so I get heavily discounted company leases and my company pays for car insurance and (most) car maintenance services are fully covered. Everyone’s situation is different but my ideal situation is to go through my company leasing program. I also have the option to buy out my car leases with a 18% employee discount.

A wealthy person told me you rent assets that depreciate and you buy assets that appreciate. A new car will depreciate as soon as you drive it off of the lot. Leasing works for me and I'm not rich.

When he talks about people that care about monthly cost and don’t ask the total cost, I 100% agree. Now, in 2017 we financed a car. When we walked into the dealer, I told them I wanted the total cost including taxes, didn’t care about monthly payments. They listened, and it went smoothly. We ultimately got a Costco discount on the vehicle.

I'm always looking at new/newer cars, and my main question is always "How much?" I'm too cheap to ever get it though. Still rolling in the 89 firebird with 350k miles I bought 21 years ago.

Good advice, my friend, and I fully agree. One should not buy anything for which one can't pay cash. It means you probably can't afford it.

Leasing is for rich people who want always the latest and greatest and don't want to own for a long time and don't wanna care about maintenance.

Leasing makes sense for many people. Especially the rich. Some people want the experience of certain cars but don’t wanna get stuck with long-term maintenance and repairs. I have leased 2 Cadillacs after financing one. You don’t wanna get stuck paying on an OLD Cadillac.

“I’ve been both, brotha. “ HA HA

He's making $125K and still expects his parents to pay his student loan debt?!! 🤔

The privilege of being 30, making $125k/yearly, & still having your parents pay for your student loan(s) while you have $25k in the bank

I don’t know anything about cars (mechanically speaking) so leasing is the way to go for me. I will not use my cash for an old car that I’ll have to constantly upkeep and spend even more cash on, and I will not buy a car that I don’t know if I’d like or if it’ll meet my needs a few years down the road.

This year we paid off both vehicles super early and it is a joy to not have monthly payments. Next order of business is building that emergency fund so repairs or surprise costs aren't an issue.

Having a 25K savings funnd is impressive and Dave is right, pay off the student loan ASAP.

I think that was very good advice. Your comment about people with money asking"how much" is very true. Borrowing to buy a depreciating asset should be avoided when ever possible.

What a difference a year makes! With the crazy prices for cars, a lease today will protect you from being massively upside down in equity. Lots of videos advising about this currently

It’s nice to own if you need money quickly then you can sell the car if you own it great advice Dave 👏🏽🤜🏽👍🏽

I would love to hear a breakdown comparing a used Car’s average cost of repairs/maintainace over its life compared with a leased’s cars cost over the life of the car !!!

You can lease some $40,000+ vehicles now for less than $100 a month ( with no down payment). Certainly worth considering. Deals vary by state.

Long story short; do without whatever it is you desire in life until you can buy it cash. If your job doesn’t pay you enough money to save up fast enough to buy something cash then you should never think about owning it.

"I'm going to be normal....which sucks" I Love Dave Ramsey

Leasing is fine if you are the type of person who can actually afford it. If your making $100,000+ /year then you can absolutely afford a $200 lease all-in. That’s just $4800/year. Which is 4.8% of your annual pay.... with a lease you don’t need to worry about maintenance or paying for repairs if the vehicle breaks down, it’s all taken care of for free by the dealership. This piece of mind is also VERY nice to have, because when you OWN a vehicle you are responsible for everything , and mechanic expenses can add up quick especially if you are buying a used vehicle. If you instead bought a used vehicle for $15,000 and it breaks down or needs repairs you are held accountable for it which adds to the overall expense of the vehicle. With a lease the day you leave the dealership you know exactly how much your going to be spending over the next 2 or 3 years.... Not saying 1 way is better than the other but I feel like certain options work better for some over others. - I leased my vehicle and bought it out at the end of the lease, but I squeezed everything I could have out of the dealer for 2 straight days before signing the dotted line. I ended up paying about $3,500 over sticker in the end... So yes, the lease cost me more money, but not by THAT much and if you include the free maintenances I got over the 3 year term it would be more like $2,500 that I overpaid by. But at the time of leasing the vehicle I was unsure of weather I wanted to actually have a vehicle for long term or if it was just for that period of time when I needed it. It allowed me the freedom of knowing I wasn’t stuck with a vehicle and could give it in at the end if I wanted too. I ended up falling in love with the vehicle and I got a lot of use out of it, so decided to keep it....and wrote them a check for the remainder of the amount on the vehicle, no more payments / no borrowing money. I think a lot of people just lease vehicles that are too expensive for them to ever own which burdens them , along with people getting ripped off by dealerships because they are too afraid to negotiate. When I’m at a dealership I don’t stop, I keep going and prodding for a better deal talking them down lower and lower and lower until they get tired of me lol... Just my .02 - again not saying 1 things better than the other, but different circumstances dictate for a person to person basis - and to dismiss leasing entirely is wrong IMO

for business owners /small big write off maybe good idea ...let say for example : If your lease is $400 a month and you use it 50 percent for business, you may deduct $2,400 ($200 x 12 months).

Tuning in to watch this dude get dabbed on lol

My NYC husband moved to SC, where we met. He was astounded that folks make car payments (interest) on a depreciating assets. Blew his mind, as he has always paid cash for used cars.

This is the 4th video I have watched with a call in and everyone makes at least 125k/year ? I don’t know anyone who makes anywhere close to that. I’m gonna keep watching and look for others who are in a more “realistic” situation like myself. Sorry if this offends anyone

Appreciate that - but it only addresses the cost of money (and related) it doesn't address the cost to keep the car - specifically repair bills, that you DON'T GET with a lease - right?? (Or any new car presumably.)

How do you justify wasted time on used car when it breaks? And you know, most of modern vehicles tend to break starting at 4 -5 years old. Now, with lease , assuming you pull the deal where the lease cost is 1% of vehicle cost [of cause the dealer invoice cost - all rebates) (not very hard thing to do by the way), you drive latest and safest vehicle, you enjoy life and car, watching when your neighbor spends time looking for good body shop which he never finds, then gets angry knowing that his vehicle wasn't fixed up to spec and preparing for next expensive issue with his old car. To each his own With lease you buy a comfort. Who can put price tag on comfort?

I just paid 1k for a 98 Saturn with 140k miles. I could have bought 10 cars if I had 25k saved no need for a lease or a payment. Just pay cash it’s not hard to buy a car save up for 10 months and then sell your old car and upgrade with what you have saved plus the sale of the old vehicle and just keep doing that until you get up to whatever price car you want.

The only time you need to lease a car is first you can write it off for business or you are only going to be in a certain area for a certain time I learned this 40 years ago

Dave: “Buy your car outright, upfront, as much as you can.” Regular people: “I wouldn’t be struggling in middle class if I could do that.” 🤦🏼‍♂️ Dave….95% of the population isn’t you buddy. We need better options. Inflation is real.

I may have one of the few success stories related to this topic. My husband prior to our marriage leased his current vehicle. No down payment. $250/mo for 24 months. At the end of the 24 months we had the option to purchase it for $18k, making it a total investment of $24k, and the vehicle is worth $36k. Buying it was the smart thing to do. It's basically new, super low mileage. I understand the magic is in the initial negotiation, like avoiding a down payment and junk fees. Also, leasing makes no sense for people that do a lot of driving as they will exceed the allowable mileage which will cost $ at the end.

Keep in mind he’s saying ‘and buying out at end of lease.” That’s the problem - never do that - little option to negotiate. Lease and then lease again is best method if you don’t want to own a car. Prior comments are on point, leasing is not for everyone.

Yes!!!!! I look at how much total not what it cost today. I learned to not be cheap but shrewd learn the difference.

Leasing is an option for people who like newer cars ever 3-4 years

I agree, leasing is better thn buying

You buy what appreciates and lease what depreciates. A car looses value once you drive it off the lot.

Been leasing for years, big question here is how many miles do you drive per year? My leases are with 15k per year, if you go over its realistically not for you. I don't know many that buy the car after the lease as stated its a no no. I enjoy driving a new car every few years with no worries. My latest lease was an end of year model with maintaince included no money down. Many get rid of a car after 4-5 years and on top of the normal depreciation ( 50%) a trade in at the dealer is usually a 2-3k loss. Today's cars are nightmares to repair after warranty is over, CVT transmissions, DGI engines, all become a nightmare years down the line. Also be aware the used car dealers know the defects of cars I mentioned thus reducing what they will actually pay for your used car. Good luck out there if you are buying used do some research, there is plenty out there on line...

I paid my first car off. I was so happy…. Let someone drive it and the car got totaled. I was crushed. Financed another vehicle and now the engine went on that. For me, leasing seems like the best Option considering I’m only going to and from work. The car prices today are outrageous and I’m so overwhelmed every time I’m at the dealership.

Leasing or buying it’s all a big waste of money . Cars are a trap no matter if it’s financed for 3- years , leased or a 72 month payment plan. Financing a new car is okay If you keep the car for at least 10- years .

I bought a used 2009 Honda Accord for 15K back in 2012 and sold it for 5K in 2019. 4K in repairs and maintenance so it cost me around $165 for 86 months. My experience during this ownership, selling wasn't easy, since it was an older car, repairs were a pain and I ended up driving a dated car for a good period of time. (lacking new safety features, Android/Apple car play and etc.) In summary, I think it's a great deal if you can lease a nice car around $200 with no down payment and etc. Of course, how many miles you're driving plays a big role, you can't lease if you drive a lot. I agree with Dave on paying cash if you're buying since what's the point of paying interest to the bank but sometimes leasing makes more sense. Overall though you buy or lease, look for a great deal, you end up loosing a lot less, if you buy or lease cheaper than average.

I lease. In MIchigan I pay 6% sales tax on the monthly payment and not the full value of the car. Instant savings. Always have a car under warranty , not stuck with lemons , and hope those dangerous touchscreens go away.

I don't see how someone asking these questions wouldn't be lying about their 125K yearly income.

I lease a luxury car because I want a nice fancy car that makes me happy. However, I OWN two other vehicles that I KEEP. The lease is simply a toy, an expenditure in my happiness. I can flip it to another nice car every two years.

Okay. ! traded in my 2013 F-150 for a new 2017 F-150. The difference between my trade and the 2 year lease was $8000, so dealer gave me a cheque. I drove the truck for 2 years, and liked it, so I bought out the lease. The buy out price was about $3000 LESS than the market value of the truck, BTW, the $42,000 that I didn't spend on the truck for the two year lease earned me another 8%. I was against leasing too, but after this deal, I am a fan, as long as you have the cash to purchase the vehicle outright.

Here is a lil fun fact. The picture to the left of this text with that 2003 f150. I boughtthis truck 10 years ago for 5800 dollars. Bought it cash it had 83,000 miles. I am still driving this as my daily driver 204,000 miles later. On average I have a annual maintenance cost of 550-600 a year . I do most all the maintenance work myself. Even if you took the truck to the shop for the work that annual maintenance cost would maybe be 800-1000. Which for the whole year is not bad at all.

He needs to write a 15k check towards his SL and be in position to borrow real money if he wants to go down that path. 15k car dude!!!

I had leased a brand new Honda Civic Si a few years ago, really nice car but I realized how stupid that was, so I sold it luckily I was only upside down $100. Bought myself an 02 Tacoma and put 50,000 on it so far, it hasn’t skipped a beat and its a waaaay nice car than the civic because it’s not taking my money every month. All my friends made fun of me for going down in car, but now few of them are asking me if they should do the same lol

so he has saved 25K and is worrying about buying a NEW car, but yet lets his parents suffer with paying HIS student loans, what GREAT son he is....

I think it depends on your situation.. sometimes it makes sense to lease. If it depreciates I will lease.. if it appreciates I will buy.

Leasing makes more sense than buying a vehicle for a business in certain states. The lease is a cost of business and can be deducted from taxes. If you buy the vehicle and keep it longer than the allowable tax depreciation period, it becomes an expense because you end up paying taxes on it as it's classified as an asset. My business no longer buys equipment as I don't want to pay taxes on the equipment every year simply for the privilege of "owning" the equipment. In effect, because you're paying taxes on the equipment every year, you're really paying a yearly lease cost to the county assessor equal to the taxable value of the equipment. The decision to buy or lease is not always as easy as Dave Ramsey wants to make it.

It really depends. Leasing makes sense if you don't want to worry about maintenance etc.

How about if I lease a truck for business? Is it better write off for taxes?

I've bought and leased vehicles. I find that once a vehicle is paid off, they seem to fall apart. It starts to become a game of whack a mole, once you fix one problem, another one pops up. It's really two sides of the same coin.

This dude is SOLID man, this is real game right here💯💯

One piece missing. I've leased many cars. When the lease ends, my cars are always worth more than the "buyout" or "residual" amount. Like 10-20% more. The last two cars I bought out the lease at end and sold the car at a 20% profit. So much better than financing.

Dave, I've leased and purchased cars. In my experience if you don't drive more than 10k a year and you take care of cars you're better off leasing. Down payment is less, I get to drive a new car every three years and the best thing is if I get into an accident, I get it fixed and return it after the lease is up. If I had purchased it, everyone you try to sell it to wants to give you less as they wave the car fax in front of your face. Thanks

A super simple way to know that “how much” is better than “how much down and how much per month” is this: add up the latter, subtract the former, and there’s the money you are wasting.

I have bougth 2 cars in cash.. Cheap cars and I drive them to the point of depreciation till the pistons wear out..

There is nothing wrong with a lease on a car depending on the car. It all depends on what you want. I worked in a city with very long stop and go commutes. Leasing was a good way to put all that wear and tear on someone else's car. A car that is nicer than you could otherwise afford. Stop and go traffic is brutal on a car. Some people need a nice car. Successful people do not do business with people who don't appear successful.

Has 25k saved Why didn’t you buy a used car from the get go for like 5k

First time listening to Dave Ramsey… it’s like your drunk uncle giving advice at the family Christmas party. 😂

I am an off lease inspector and inspect cars at the end of lease for large finance companies. From what 90% of the customers tell me, it's not about being flashy or not wanting a a used car so they can be debt free, it's the repairs !! People do NOT want to deal with repairs !! So they lease every 3 years cause the vehicle is under warranty aside from the regular maintenance. What's the usual repair cost for a used, 5 year or older, paid in full, car? Depending on male and model, About $2k - $2.5k a year? In this guy's case, $200 a month for a lease (must be a cheap compact) is roughly the same amount for a new car with a warranty vs a used car with yearly repair costs. Please understand, if you get a used high line German or British car, you will be way over $2500 a year. Those are high maintenance vehicles. Honda, Toyota products, even Acura/Lexus are very reliable and not so much in repair costs.

One of the Better Calls Buy a Car in the First Moments not in the next months or years.. Pay your Debt you get enough from work ..

How are you supposed to buy a reliable car when you need one and don’t have the cash 🤔

Renting money, buying insurance and contributions to SSI are three of the worst investments that I have made.

what is amazing is how many situations in marriage where one spouse is a "how much is it a month" and the other is a "how much is it" person. lol seriously opposites attract.

Scotty Kilmer waves off purchasing Mercedes, BMW and Audi, says just lease those expensive to repair endless money pits. 😆

This isn’t true for every case. I understand how it’s better to pay cash for a car but sometimes you can get good discounts on the leases. It all depends on the residual you get and how good your credit is.

Might sound like sacrilege to this crowd, but if you are looking at a sedan in the US, you would be shocked how cheap you can get new. New car sales are suffering record declines, specifically sedans, and retailers are literally desperate to sell them. I got a brand new Elantra for less than 75% MSRP (20,450 msrp, bought straight up for 14,500). Meanwhile used car sales often end up costing you more than you expect because the used price advertising is even more competitive and misleading than the new car market.

My cousin leased a brand new 1995 Toyota Camry for three years. By the time she was done paying for the car, they wanted to charge her an additional $3000 in penalty fees, or a balloon payment of $18,000 on top of the money she already put into the lease payments. After witnessing what she went through all those years ago, I can only imagine it’s gotten worse.

I was gonna ask the same question regards to leasing. 👌

$125 k and mommy and daddy are paying his school??? That’s the the problem in America! All still babies!!! Grow up. The only things your parents owe is to teach you it’s a hard life and you have to work if you want success!!!!

I call BS. A person with $25k in savings making $125k would not call with this question.

He makes $125k a year but his parents are paying off his student loan? What the heck?

That's pretty much exactly what I would do. And I'm just using common sense growing up in a typical Asian household

Although I generally agree with Dave Ramsey, I don't think it's necessarily a bad idea to borrow money to buy a reliable vehicle. Both my daughters bought new plain reliable cars when coming out of high school. I cosigned, they made the payments, I paid the insurance. They were both going to college and had jobs on the side, and since we live in winter wonderland in Canada, I wanted to have them safe reliable vehicles. Both girls made every payment and paid of their car and built their credit. My philosophy if you borrow to help you make money then it's ok, but if you borrow to buy toys you are a fool. By the way 45 years ago I was a student, bought a 71 Chev Impala drove it for 4 month and then drove across Canada and then sold it for $300.00 more then I paid for. My car payment was $65 a month

Leasing is still the way to go. The best part of driving a new car is the reliability/safety. God knows how much you would have to pay if a beat-up car goes wrong in the middle of a highway during rush hours to the work.

What about the cost of ownership that goes up after you keep the car longer periods of time

I'm in my first ever car lease so I can't comment on the whole experience from start to finish yet because I still have about 9 months remaining on my 36 month lease. However I will say that the residual value is what the car is most likely going to be worth, correct? I think we can all agree on that and we know that number when we sign the paperwork in the beginning. Therefore at lease-end if the vehicle is worth less than the residual after 36 months I'm not quite seeing how you think you're ahead of the game with buying, you're then underwater in a car for several more years that's tracking below even what the bank felt it would be worth at that point while I'm walking away. Furthermore if the vehicle is worth more than the residual value at lease-end I have the option to buy it then turn around and immediately sell it. What I would say is that cars are unfortunately an expense no matter how you slice it, lease or buy it's a depreciating asset, but a lot comes into play when comparing the two options. It's true after four years paying on a financed car you will almost surely have some trade equity but the payment has been higher all along. You could put the difference between 6 years of leasing vs buying in the bank and probably have 10k or more in 'equity' in the bank which offsets much of what you'll have eventually 'gained' when it becomes a fully owned asset by paying off the loan. Granted if you financed for 60 months and paid off the loan your 'equity' is whatever the vehicle is worth at that point (which almost surely exceeds what I've saved in the lesser payments) but you've also been paying significantly more per month for years at that point. Additionally many a factory warranty these days is only 3 years 36k miles, so you could be stuck making payments plus repairing out of pocket for any mechanical breakdowns. With that being said I do understand where you're coming from but I also think you're oversimplifying things by saying leasing is a terrible deal. Bottom line I don't doubt when everything is considered it's probably a slightly higher cost to lease vs finance but I suspect it may amount to a negligible difference in many cases.

I feel like this stuff isn't really helpful, most people can't pay off and not finance a new car. Have you seen how expensive they are nowadays?