Buying vs Leasing a Car 101: How to pick the BEST choice
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- Опубліковано 27 сер 2024
- Here’s a common questions I’m asked…is it better to lease or buy a car, and which one is a financially better move? I’ve done both, and these are my thoughts as to which one is better - enjoy! Add me on Snapchat/Instagram: GPStephan
The short answer is that it really depends on your situation and how long you plan to keep the car, but I’ll describe the pros and cons of each and what might work best with you.
Lets start with owning and buying a car. First of all, you can buy pretty much whatever car you want, unlike leasing where it’s almost always a new or newer car. Generally, unless you just buy your car outright in cash, you’ll end up financing the car. This is when you take the cost of the car, minus your down payment, and get a loan which you’ll pay off over a specific period of time - the most common being 48-72 months. And then you’ll also pay whatever state sales tax is on top of your purchase. Factor all that in…and then once you pay off your loan, congratulations - you own the car free and clear. And then when you go to sell it, you’ll get whatever price the car is worth - minus whatever you might still owe on the car.
However, a few drawbacks of this - unless under warranty, you’ll generally be responsible for maintenance and wear and tear items during your ownership, especially on an older car, and this can add to the cost…you’ll also need to pay sales tax on the purchase price upfront…and totally separate from that, your monthly payments tend to be higher with owning than with leasing.
Leasing generally works best if you’re the type of person who always wants to have a newer car every few years. If you plan to get one car and drive it forever to the ground… don’t lease your car. But depending on how long you plan to keep the car, leasing could actually save you money. With leasing, you’ll generally be leasing a brand new or newer car. You’ll usually have a down payment and then generally you’ll have a 24-36 month term where you have a fixed monthly payment, along with a set number of miles you can drive each year. You’ll need to return the car with your set amount of miles or less or risk paying fees and penalties.
Now when you lease a car, you’re not paying the full amount of sales tax upfront - which can save you a TON of money. The lease price is determined but the depreciation the car is going to see during ownership, plus some finance charges. You’re basically just paying a monthly amount of the depreciation, rather than the entire cost of the car. Therefore, with leases, you’ll generally pay LESS per month to drive the car because your financing only the deprecation…not the entire thing like when owning a car. With a lot of leases, too, maintenance is often covered…so you can pretty much just pay a set monthly price and not have to worry about normal wear and tear/maintenance costs that come up. And when the lease is done, you don’t have the hassle of needing to sell it…you just turn it back and you’re done.
So here’s my thoughts. Both leasing and owning have their own advantages and disadvantages, and what makes one better than the other is dependent on your situation. If you plan to keep your car more than 5 years or so…it’s almost always better to buy the car. Whether you buy a brand new car or an old used one, the longer you plan to keep the car, the more it starts making sense to buy it.
But if you’re like me and you want the privilege of owning a new car every few years… it’s cheaper just to lease it - it means I pay less per month since I’m only paying for the depreciation, I don’t need to pay sales tax on the entire cost of the car - only on my monthly payment, and I can simply swap it out when the lease is done to get a new one.
Ideally, for most people out there who just need a car to get from A to B…the BEST option is to buy a car that’s 3-5 years old and has already hit most of its depreciation. After about 5 years, most cars depreciate at a much, much slower pace - so buying a car like this and keeping it forever would be the most financially “sane” thing to do. Then just finance it at a low interest rate, re-invest whatever money you would’ve spent on the car, and hold it. Then when the car falls apart and you can’t drive it anymore, do it again.
For business inquiries or one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness@gmail.com
Suggested reading:
The Millionaire Real Estate Agent: goo.gl/TPTSVC
Your money or your life: goo.gl/fmlaJR
The Millionaire Real Estate Investor: goo.gl/sV9xtl
How to Win Friends and Influence People: goo.gl/1f3Meq
Think and grow rich: goo.gl/SSKlyu
Awaken the giant within: goo.gl/niIAEI
The Book on Rental Property Investing: goo.gl/qtJqFq
Favorite Credit Cards:
Chase Sapphire Reserve - goo.gl/sT68EC
American Express Platinum - goo.gl/C9n4e3
am switching to bicycle! no payment, no gas, no insurance. whoever hit me i got insurance instead.
Kong Chan exactly
Trust me in USA not all drivers have insurance, if you talk about your life insurance, hf with it;)
@@xmseraph ^ got re ended twice and both times people didn't have insurance. Luckily i pay for none insured motorist.
Kong Chan whoever hits you will be paying your family for a funeral
@@xmseraph don't know how people drive without insurance they're insane
BUY JAPANESE , LEASE GERMANY
y
@@ryanbland8114 maintaining a japanese car is cheaper than European cars.
Not these days
I have a bmw and I agree
World War II
Bottom line is, if you are broke, don't even think about getting a "nice" car.
Agreed
False, if your broke think of that nice car as a milestone. If you can get yourself set to a goal it tends to not feel as hard.
What is considered broke though?
@@GoneGYT So your milestone will be set to aquirering a liability?? How about you buy an asset?
Barney Stn Doesn’t always have to be a liability. Can easily be turned into marketing, and then write it off
One big thing most people forget is Lease is actually great if you have habit of getting into accidents. Accidents greatly depreciates your car value which you don't have to worry about with leases as you simply return the car with the bad accident history.
very true!
Low value is better than zero value. You get no money back when you return a lease.
I don’t know if anyone noticed but I like how u moved around during ur video rather just sitting in the desk. I have no idea why😂
This took forever to do! LOL Got the idea from MeetKevin!
Daniel Tesfai atleast its not thai lopez moving around
I think the change of the image keeps you focused more on longer videos. I liked it too))
Yeah he looks like a hunk 😍
Priceless comment.
I was just looking into both options and somehow graham makes a video about it perfect timing proud to be part of Graham’s community
Happy it's helpful!
9:04 - And then just "HODL" it! That phrase still makes me chuckle. Great video again Graham, thanks for breaking things down for us!
Ha thanks so much!
Classic and Vintage cars of certain makes will also appreciate :)
true!!
not used as a daily driver. Classics are implicitly low mileage. Everyone needs a daily driver, and they will always depreciate
wHerES tHE MIaTA
@Ty Saedal it's in our hearts
Hi bladed
Decisions decisions decisions... Nice video man 🙌🏼
Thanks Tanner!
Tanner Planes omg I love your videos
Tanner Planes ayeee hahaha the homie
I payed 40k for new truck, put 15k down with old car, payed off 3 years later. NOW I DONT THINK ABOUT A CAR PAYMENT FOR 7 YEARS. I pay my self 400 dollars a month for a new car
A good idea would be to own a reliable, paid off car like a Rav4, Camry, etc. then lease whatever fun car or daily you want.
Agreed! Or depending if you'll keep the car for awhile, just financing it and driving it a long time
That's what I do. I own and daily drive my 2007 Prius and lease my BMW.
That’s exactly what I plan to do💯
@@jruerph smart
imma lease that jawn. cuz I treat cars like iPhones I need a new one every year!
my man ipod
You can tell bro bro from philly or new york
@@MiahMunch Chester it’s close to Philly
I drove my 86 trans am for 3 years and then sold it for 600 dollars more than I paid for it after the exhaust fell off! lol
Haha well done!
Well with a car like that a weight reduction will make it more valuable.
I wasted thousands of dollars fixing a lemon for years. The car also regularly put my life in danger - 2003 Ford Taurus lemon
@@modelsupplies Stick with toyota or honda if you want a car like that. Only go for Americans if you want some power under the engine! But all in all, cant go wrong with a camry hybrid or corolla.
Leases are for people who want a new car, no repair hassles, weekend warrior but not really drive to from work AND have a business or run a charity to write off at least 1/3 of the cost of the lease AS WELL AS write off a portion of the insurance (plan on doing this with the Model X 2-3 years from now for my photography/tour business).
Buying is for people who know they want to have this car for years and plan on keeping it. Usually better to buy a 3 year old car at least to avoid most of the depreciation.
At this moment buying a used Honda or Toyota/Lexus to keep is best. Lease the others especially if you have a business
justSTUMBLEDupon I agreed
You owned 3 Prius’s 😔😔😔😔😔😔😔
...😑
Hey don’t hate there great for the environment but fuck I’m not driving one
Harrison Lowe lol
They aren't so bad I been in one but yeah I wont drive it lol I'll get bullied by my car friends
I love that you bounced back and forth between Priuses and more upscale cars. Paid off my Prius early, been rocking that car payment-free life and the gasoline savings ever since. Moved closer to work, started walking there more, got my annual mileage down to approx.5k/yr, which decreased my insurance by about $300.
As someone who personally does not care too much about what I’m driving as long as it has enough space for me and gets me from A to B, these are the things I look for when buying a car:
>Low mileage
>Roughly 3-5 years old (to get past those first high depreciation years)
>Good price for its use
Thoughts?
"Want a new car often" ....there's your reason right there why people are in debt
No. Wanting a new car before it is the right time for a new car (i.e. lease term ends or upside down on a purchase) is why people are in debt. If banks were not willing to finance negative equity it would be a whole different ball game. At the end of the day it only matters what your goals are. Own and pay for a nice car, or own a beater and hoard away money. To each their own.
Shawn Petty Own and pay for a nice car 😂😂 when leasing you don’t own the car your renting it ...it’s better to buy a car and have it for like 7yrs and save up for your dream car !
It's so weird that everything you buy in the US is shown without sales tax. Probably New York and California have the highest sales taxes, but what rates are we talking about? Here in Holland it's 21%, which is absurdly high compared to the US if I remember correctly.
WOW! That's insanely high! Here in California it's about 9.25%.
Graham Stephan Yeah I really hate the taxes here. Last year the government even had like 3 billion Euros left over from the tax revenue.
Bas here in croatia 25%
Graham Stephan 25% in Germany
#loveEU
Great video . I haven't leased or bought a new car from dealership ever . Usually buy used car cash for a quick flip 🤔
That's a solid way to do it!
I had an 813 credit score at the time and a 13 year old Ford Taurus lemon that I had purchased pre-owned. I decided I wasn't going through that again, so I gingerly stuck my toe back into the car pool, if you will, by leasing. In 2015, I Googled cheapest car with the most tech and safety features and up came the 2016 Chevy Trax. I decided to lease it for 2 years to be sure I didn't get a lemon. I LOVE that car. It's exactly what I need, has spaces for our phones, driving glasses, extra glove boxes, backscratcher (yeah, pack one), etc. It runs beautifully, has been great on gas, easy to park, and was like stepping into the future coming from a 2003 Ford Taurus. After the lease was ending, I had planned to buy a new one, however, Chevy got rid of all of the little nooks and crannies I'd grown to love! What were they thinking?! So I bought the car I lovingly broke in from new... and I haven't looked back in anger once. Still love it and having paid the lease for 2 years actually lowered my payments and total amount due. I plan to drive it for at least 10 years. All the gurus warn against leasing and it was one of the best financial decisions I've made.
Graham, I would love some more vehicle-related videos from you! It would be highly beneficial to hear your perspective on financing vs. leasing in today’s wild car market.
This is the best video I’ve watched on this subject. I finally feel I have a bit of the clarity
Thanks so much!
Best review about this topic I've seen so far! Thanks for sharing your own experience with both!
Please never stop making videos! You’re an amazing mentor for all young people today.
I live in MD and here we have to pay sales tax on the FULL sale price of the car, even when we lease. So leasing isn't very attractive, unless you get a really good deal. Also, a big factor in lease payments is the residual value. Car companies sometimes offer really attractive residuals that make it possible to drive luxury cars for the same price as Hondas and Toyotas.
what's it like in DC?
Love how you put tai's picture behind the word "lease". You clever devil you.
Hahaha gotta make subtle jabs ;)
Graham Stephan You are awesome! Thank you for not only being funny but always adding value to my life. :)
Lmfao clever asf
Graham Stephan ahah ahaha I’ve realize that too
Getting really tired of watching these good videos. Keep up the good work.
Haha thank you!
I get all of his points. And you definitely can save a freaking ton by diving your car into the ground before buying another! But, since we live in a consumerism world, it can be hard for many people to do this
ohhhhh because people might think you're poor ohhhhh would that hurt you little sensitive feelings ohhhhhhhhhh poor youuuuu
Agreed. Most people wouldn't take the approach of buy it and drive it until it doesn't run...so for someone who wants the newest car, leasing is probably the most solid option, but you pay for that privilege.
Thanks for the reply Graham! I love your channel, keep up the solid work!
chung chan that's how most people would feel haha. I'm totally ok with driving my paid off car that is 9 years old! People can think what they want, that's fine by me!
Tanner Schwien it probably depending on your commute distance. If your doing 100 km round trip per day then driving it to the ground sound like a pretty good idea. Which is what I’m doing.
Leases you have to be careful on the line “cost of capital” which can screw you sometimes. I was looking at 1 lease were the cost of capital was like 19% of the sticker price.
CAR HACKING!!! can't wait for that video
You got it! It’ll take me a bit to put together but I can try to get it out for next week.
SAUCE-A yeah me too
SAUCE-A I agree!
Sounds like an awesome vid would help out major building my credit rn getting a second car next year!
Car hacking 101: buy a full size SUV, live in the trunk, rent out the main part of the cabin to a family of 4, who will drive it around.
Pros: you live and drive for free.
Cons: Your "home" isn't always in the same place.
DEPENDS. There is no formula that is perfect for every situation and person. Plenty of lease AND buy options include (some) maintenance, 0% tax, no down payment, etc. so it depends on YOU, your CREDIT, your LOCATION, the DEAL, the DEALERSHIP, the CAR.. *The only advice one should consider is to COMPARE OPTIONS there and then*
Pick the best for you atm, enjoy it and don't look back bc there's always a better deal, car on the horizon
I wish I could like all your videos a thousand times, just to show my appreciation for all your hard work on these videos
I 500% agree with you on this one. I would never buy any car on payments because I know one too many people that have been screwed over with depreciation. Lease if you want the new car, buy outright if you don't want payments and depreciation. Even a 10 year old car that's been taken care of could last you another decade for cheap.
Pretty much like buying or renting a house, with depreciation on steroids
You read my mind with this video, I've always contemplated between leasing and buying a car and no one has ever make such a direct and concise video. Greatly enjoyed it.
Side note: see if you can get a hold of Gary Vaynerchuk to be a guest on your channel. The guy is an entrepreneurial genius.
Thanks so much man! I'd absolutely LOVE to be on Gary's channel!
The "Hassel's" you are talking about when selling the car, is a lot easier than dealing with all of the lease rules & fees that a lot of people end up getting caught up in. The good thing is YOU hold the advantage when you own the car (even if financed). There's IS NO cost difference in Leasing vs. Buying, it's only a payment preference with rules/restrictions attached to leasing. (as long as your not bad at buying cars) Also remember when you lease a car you are BUYING a car as well, so negotiate that price if you choose to lease.
I bought a 1999 Toyota Tacoma with 84k miles on it for just under $8,000 in 2003. (Sticker was $9,000 something.) I still have that same Toyota Tacoma and it now has 345k miles. That little truck has been amazing to me. Best purchase of my life. 😊
and when you have a business leasing a car is good because you can write off the paymets that you made in that year !!
Unless you have a construction company and own a truck you can't write off a car. Especially a sports car.
el presidente You can do the same thing when you own it. Best to pay cash and keep fixed expenses down on your company.
leasing a car is the most expensive way to get into a car- Dave Ramsey, that business write off is a myth
El presidents is correct, there are many professions where you can write off the lease. Additionally you could use the difference between a lease and new car payment to invest each month
Alex wrong. I can write off my range rover because I use it to drive to client meetings.
Buying cars cash and driving them into the ground is my specialty. The last car my partner and I had we drove for 5 years and paid $1,000. It was a 1996 Subaru Impreza Outback.
Wow! That's awesome, $1000 over 5 years is epic!
What are you currently driving now out of curiosity?
@@LostWorldVideo public transportation
Subie!!
@@AbeOrtiz88 lmfao
I bought a 5 year old car, I love it and don't pretend to sell it.
If something breaks, upgrade time!
If the engine blow up someday, swap time!
For those who can afford it, leasing a car is a great option if you can negotiate a good lease agreement. Your lease payments are never wasted if you decide to buyout the vehicle and sell it before the lease is up.
Lease is only a good option if you have a habit of getting into accidents. Because that will greatly depreciate the car value which doesn't matter if you lease and return. But if you end up without any accidents you overpay about 25% because you could have resold the car for a higher return in comparison to the lease savings.
Long comment, but bear with me here,
Some people are saying leasing is bad because it is basically paying for the first couple years of depreciation of a car and not owning it in the end, it is cheaper to just buy a used car.
Non-car people should really stop being a cheap and recognize the intrinsic value of changing a new car every two or three years.
First off, it reinforces a good image, say if you do business with some wealthy client, they will probably immediately look down on you and doubt your success and capabilities if you show up with a 10 year old Toyota.
Secondly, new cars are better equipped with new safety tech and are generally more reliable, and with full factory warranty, you are not likely to have to pay any maintenance costs.
Thirdly, for people like me, who would likes cool new cars, driving a new car simply makes me happier.
By keeping an old car, one spontaneously foregoes the above.
Moreover, leasing a car is likely to be cheaper for many people than financing the car, or even straight up buying it.
Primarily, monthly cost for leasing is almost always less than the monthly financing payment, and leasing only asks you to pay for the depreciation amount, not the full car's sticker price.
Second off, you get a tax write off as the monthly payment can be claimed as expense easily, if you are in the top tax bracket like me, this effectively cuts off almost 1/3 of that monthly payment. And you pay less vehicle tax, much less.
Lastly, this one is mostly against straight up buying a car, money has time value, the more you can delay the payment, the less the payment is relative to you. The risk free rate (the rate at which your investment will grow without nearly any risk at all) now in the us is about 3%, my personal portfolio did about 11% last year.
In my case, I’ll make a simple model, let’s say that I used $100 to buy a car in cash 3 years ago, I wouldn’t have any of that $100 right now, but if I leased that car, and I pay $2 a month and have a $10 down payment and put all available money in investment at all time (total payment 2*36+10=82, 82% of the full car's price, way more than in real life, ~65% ish irl), I would actually still have slightly more than $40 at hand after the lease is over if I maintain my annual 11% (0.9% monthly) and balance is calculated monthly, (do remember that interest in real life is calculated daily, and in that I would have even more interest money, but this is a simple model), the car will likely depreciate about 60%~70% in three years. If I bought the car, I will have to sell the car to get that money back, it’s a whole lot of hassle and I’ll probably have to sell it at a lower price to sell it quick, remember money has time value so I need that cash quick. That makes buying the car a loss for me.
Some might say, “well I don’t sell the car I don’t see the problem here”, but the car you have worths less than the cash I have, and my cash will only grow in value as I invest, your car on the other hand will depreciate, albeit slowly after 3 years, but depreciates nonetheless. Plus by driving an old car, you lost the intrinsic value of a new car as I mentioned in the beginning.
Very well said!
Nice post , I agree
Would never want to own a depreciating asset. Always lease.
I wanna lease 2018 Mercedes A180 a class, but if I do so insurance is gonna kill me lol and I’m 21 even worse when you are young
Agreed this is why I lease also don’t have to worry about mechanical issues and maintenance.
Low payment as well which I am totally fine with adjusting in my budget as a fixed cost.
I miss my grandma so much she was a millionaire and owned a lot of billboards in haltom city and ft worth texas and drove a Saturn
They should offer some money back per mile for every mile unused. Maybe 10-15 cents. That would encourage people to bring back the car with as few miles as possible, and it’s better for dealership so that they can use that car for longer
I'd be interested to know more about tax write offs for leased cars.. and interested in car hacking video!
Yes! Will do this!
thank you Graham for this video and many of your other videos. I know this topic isn't specifically about real estate but you obviously have great time management skills. I'm really trying to learn the habits of successful people. Would you mind doing a vlog where you take us through your day from when you wake up and how you organize your day to be the most productive!?!
Sure! I’m not totally productive though, many more people do much more than I end up doing haha.
I am so happy you made this video bc this is something I've been debating over what to do for a few months now
Thanks so much Caitlin :)
On a lease, If you don't use the miles you paid for, they should owe you similar to how you owe them for going over. I'm not saying cash but at least credit towards another car. When a dealership is planning on selling a car with 45k miles after a lease and it comes back with 35k, they cream their pants. I don't see why they couldn't credit those miles towards another lease or purchase even if it's 10 cents a mile
Good video but you failed to mention the insurance issue you hit many of the points you need to hit minus insurance which should be calculated into the overall payment for budget. I am under the impression that insurance is higher for lease vs buy. So the cash flow could be offset by that expense.
I definitely agree with you Graham. I was personally always stuck on financing a used vehicle until i figured out how to work the dealership. When getting a lease, if you have good charisma or sales skills, you can make a lease work amazing in your favour by getting unlimited KM's and when you bring it back, the person you dealt with can make up the negative equity with hidden rebates. This mainly works for more common vehicles that have bigger rebates, but you can run a leased vehicle to the ground and dump it. The only way i ever lease a vehicle! #SecretHack
KM?
Buy, only if you love the vehicle and you can see yourself still in love with it 4 to 7 or more years. Lease if you want to jump in a new model car every year its easy. This is the pro and cons for each one, Buying if you run into reliability issues while paying a car note choose wisely in the manufacturer of vehicle on long term usage. If not, you might end up trading in the vehicle which you will have negative equity, you will be upsidedown on the car loan. The dealership will give you a offer for your trade depending on mileage of the model, make and condition of the specific vehicle. Leasing, this is where it gets bad you will never own the vehicle, you have to watch the mileage or pay a penalty if you go over. You have to turn a vehicle back in every year. Pro! But you get to walk away from a lengthy loan to pay off a vehicle. I would buy for me personally a car I love and keep it. This is my choice. Paying cash is out of reach for the majority of working class people. Where the average price of a new vehicle is somewhere in the ballpark of $33,000.00 to $36,000.00 this is where the downpayment and the finance charge happens, depending on your credit the interest rate for the loan. It's easy to tell the general public to pay cash for a car, it sounds good but its not logical for most people. Unless you have a large amount of disposable income or money saved, lot of americans dont, when it comes to this. Same thing for housing that's why banks always tell customer to do a 30year mortgage. If it was not for mortgages more then half of the homes in the U.S would not be purchased. $300,000.00 or $400,000.00 up front for most people not going to happen. If you are wealthy then yes. Thanks for this informative video.
I just turned in an Audi lease after six years of leasing. I lost a lot of money on the lease deals because they put on proprietary tires that needed to be replaced and could not be repaired. Spent over $1000 over two cars. Also, you have to pass the inspections on turn-in, so you're liable for any dings, damage or internal damage - not just the miles over. They are more forgiving if you're planning on leasing another car from their manufacturer. Since this was my last Audi lease and I really took care of the car (highly recommended) I got away with $150 for wheel scrapes against the curbs and a teeny tiny rock dimple over the rear fender. I decided to pay cash for a USED Lexus hybrid this time around after researching reliability and cost of ownership. I DID love driving that Audi sport sedan though; and I also loved taking it in for service and walking away with no bill.
This is great, you might want to include average repair costs, as owning a car and driving it into the ground becomes less and less advantageous if you have massive repair and maintenance bills.
Graham in other video: NEVER BUY TWO OF THE SAME SHIRTS UNLESS ITS A BUY ONE GET ONE!
Also Graham: I bought two of the same cars in different colors
Your financial advice is extremely helpful Graham, I am only 17 but I’m looking forward to using your advice when I grow into my 20s! Count on me as a subscriber for years to come!
Thanks so much!!
Graham Stephan You’re welcome! Your lotus looks sick 👍 I bet it’s an awesome car to own considering the depreciation is low and the car is a fun ride!
I hate when people say "Leasing vs Buying a new car" and use "payment as so much lower when you lease". Really?
It should be "Leasing a new car vs buying a used car for $15,000". There you have it. Buying a really used car makes more damn sense.
But then you have to pay for maintenance and more. I brought my first car for 10k cash and trust me it was a steal. Yet I still wish I leased because Im already on pace for 2k to fix and I imagine it’ll last me 3 more years and I’ll sell back for $2000 😢😢😢 I might’ve well leased and got my money’s worth. Next time I’ll lease 5-10% of my annual for 36 months and buy it after the contract is up I guess. And I’ll have graduated so we shall see 😯
I wish I could be excited about this video... I've never bought a car worth more than $5K :P
That’s ok! Keep the $5k car and drive it forever!
I mean if it doesnt break or need fixing every now and then what is the problem xd..maybe you cant get girls with it but still
I'll tell you one thing, I would totally buy another Jeep Patriot. Bought mine for $3,500 2 years ago with 146,000 miles, spent $2,000 total on repairs & it's now got 171,000 miles. I'll drive it until it drops :)
Great... Very wise move. You're the guy who hasn't lost a stack of money on cars 😀👍
LandonGendur i dont think ur teacher would care about sales tax LOL
Hey Graham, would you be able to make a video on types of mortgage loans, which ones are the best, and how to make sure that you qualify for one? Thanks for the great content man!
Thanks man, finally someone who said whatever I couldn’t decide on. Cheers
If you live in california and can afford to have a fake residence some where like montana just register it there
Can you please do a video on buying (cash up front) vs financing vs leasing? I’d love to hear your thoughts comparing all three.
Dave Ramsey is cringing
so am I. A bit disappointed in Graham here.
theAbeElement why
@@cheery-hex I'm disappointed in you for being disappointed.
theAbeElement He makes millions a year so it is a good decision for him. If make under 6 figures a year and then lease a car then it’s a stupid decision
@@jordanroig6626 That might be the case for you but not for everyone. I think he did a fabulous job of explaining the information so you can apply it to your own situation. I've leased and purchased and they each make sense for given situations. It just depends on what you plan to do and how you earn your money.
In short:
- If you want to keep the car, probably better to buy (or buy it at he end of lease if residual value is lower then market one)
- If you like to have new car every 3-4 years, then lease it. That is the only good solution. Except buying some exotic car that will get in the value not lose it. But then, you probably do not have any kind of financial problem.
- Also, new car is always loss of money. 1 year old or 18 months old are usually 30% cheaper but still pretty new. This is what I am usually buying/leasing.
I like how he explained it. Very objective. And you’ve done it all
What are your thoughts on buying a used car ($15k) before buying a house? Part of me wants a newer car to save gas and better looking car, but I also know its a WANT more than a need. A house would be an expensive purchase, but would eventually make passive income... But that passive income comes after a few years, since I will need a mortgage/loan.
just love itt when you say : SO LETS SAY (the example))
Responsible for maintanance would not be included if we assume both cars were brand new with a factory warranty. The other thing that we have to assume its we are gonna drive them 20k in 3 years for the math to balance out that variable. If you are a road warrior then buying would be the best option and don't even think about leasing
The best way to buy/ sell cars is this. Buy at 4 years old. The car is only 40% - 50% the price it was new, however still has 80% of it's integrity!!! Then sell that car at 10 years old. Right before all the repairs start happening!!! So you get the $30,000 new car for $13.5k-$14k. use it for 6 years. Sell it at 10 years old and about $5,500- $5,000 still left in it. Now your next $14,000 car that was $30,000 is costing you with trade in..... $9,000! That is the best way flat out!
Pro tip: Not only do Honda S2000s don't depreciate, they (all model years) have been RISING in value since about 2013.
A 19 year old college kid totalled my mint '08 S2000 with less than 30K miles (sad face). Haven't got even close to that feeling driving my Lexus RC :(
So sorry to hear about that, that sucks...the S2k is such a solid car.
Re3iRtH sorry to hear about your s2k. I have a 2002 S2000. I thought about selling it but your right it is so much fun to drive.
Here in Canada, our sales tax is 13%...
That sucks.
Always buy used. Leasing new is cheaper than buying new but those are the two most expensive ways to obtain transportation.
Buy used, private seller, pay cash.
One more big consideration is that like in Pandemic now, people stay home and fewer commute/travel opportunities. Leasing now might not be the best option.
@grahamstephan what do you think about my situation.
I leased a new 2017 Honda Civic Ed (second trim). Around 21,000.
2 years are over I have less than 1 year left (April 2020).
I plan on using my car till it dies. 20+ years.
I have 15,900 miles on it.
Pay $248 a month at the moment.
At the end of the 3 years I’ll have $13,000 to pay.
My car at the moment (same trim and miles) is selling for $17-$19k.
Should I buy out the lease. It makes no sense not to right?
If I didn’t it would be like I’m renting a car for three years. Unless I lease another and start all over again.
Buy the Japanese cars for the value. Lease German because of depreciation
How do you set it up as a business purchase? Do you just use your “company” credit card to pay? Or do you have to file paperwork before hand?
Sure you could buy it under a business or LLC. Or you just claim you used x% for business on your tax return.
In the UK the business car purchase will not work if you plan on using it for personal use at any point, there are so many rules that it just makes it near to impossible to get anything other than what is used for business 100% of the time like a delivery truck for example.
Graham Stephan I just watched this video, and subscribed. Am on thr verge of financing a car, but i know i will upgrade in 2 years, am only getting a 2015 of that car because i want lower payments for now. However, i will see how much it cost to lease the 2017 or 2018 edition. The price of those usually drops about 50% after 3 years which is when i may buy that car. I also added you on snap, i may have some more questions, if you don't mind. You actually elaborate the answer to this one question i have asked for 5 years now.
At the end of a lease, if the market value of the car is higher than the payoff you can take it to another dealer and they will usually buy it from the original dealer at the payoff cut you a check for the difference, or at least a good chunk of it. This happens when people don’t use all the miles they paid for or the car ends up depreciating slower than forecasted.
Big one for me is the tax benefits of a lease if you own a business. If that doesn't apply to you, you're better off buying an off-lease used car since the leasee is eating all the new car depreciation.
Ontario sales tax is twice of California's, at 13%
Bob Smith my fella ontarian
Canada sucks!
Lol holland has 29%
Lmao goddamn and I though nearly 9 in New York was bad
Very well explained. Show this to Dave Ramsey lol. That guy is stuck to his old ways.
No. Leasing is more expensive period. Just do 2nd grade math, it is simple. A Mazda 3 lease is at $2,000 down with $149 for 36 months. After 3 years, your total lease payment will be $7364. Find me a 3 year old low milage Mazda 3 that is $10,000 bucks. The best I can find is actually $15,000. So you loose $5,000. On top of that there is restriction on what insurance you can purchase. You are required to buy the best insurance to protect "bank's" car.
Dave Ramsey is right on this one. Math dont lie.
chan stanley not everyone wants an older car and having to deal with car maintenance.
chan stanley $7000 is cheaper than ten grand of owning it
chan stanley; you don’t have to look for a low mileage mazda to buy or finance, you’ve already been driving it for 3 years and that $8,000 difference is the dealer markup... also, manufacturers are different with their leasing programs. Leasing is also a short term commitment, when you you finance or purchase it’s a roll of the dice with your $ being committed and/or stuck with that machine. In reality a vehicle is a depreciating mode of transportation and a machine with 100s of 1000s moving parts...
@@WitnessDeeEZ I dunno why everyone points at maintenance as if its this horrible thing. Change the oil and don't beat the car into the ground. If you pay off your car in 3 years and drive it payment free and issue free for 6 years, you come way ahead. Most pro leasers just want something new every couple of years because they get bored - not because they need something to get them to work and the grocery store.
Now I'll concede that the day is coming where leasing will end up making more sense. Cars, like everything else are becoming more computerized and we all know more digital, computerized things break down faster and are more expressive to replace. But while it's still possible to get a car with a basic ECU and old style transmission, it still makes a lot of sense to buy.
I’ve done both. I lease if it’s an unreliable car or if it’s a good “lease deal” but will buy and just sell in 3-4 years if it’ll hold its value. For example, I used to have a Lincoln with a 40k sticker for $250 a month. The car was worth 18k at the end of the lease so that was a good deal. Before that I had a mustang which was around 32k. I traded it for 26k after 4 years. I lost 6k for four years or like $150 a month. So it really comes down to how well the car will hold its value and the incentives the manufacturer will put on the leases.
My last car: bought it after someone else’s 3 year lease for $210 a month. Drove it into the ground at 175,000 (where fixing it would’ve cost more than it was worth). Made $300 a month payments to a high yield savings for 3 years after paying it off. Bought my current car cash at 95,000 miles, and continue to pay myself into my car account (adjusting payments a little higher each year) I will drive this car into the ground also, and by that time I will be able to pay cash for a 30,000 mile used car (I have no desire to buy new, probably ever), drive it to just under 100,000 miles and sell it, buy another @ 30,000, rinse and repeat ad infinitum... my father got to this point in his 50’s and I’ve wanted to get there ever since I was a teen. I’m now at car financial freedom! (Nowhere else, but the car’s a start!). These‘ ve all been VW Passats so I’ve made it to this point driving a nice quality car, not a beater (I need a wagon, hate SUV’s, and don’t like Subarus, so the Passat has been the sporty, higher end car that made sense without going to the ‘luxury’ car realm).
Just gonna leave this here... 6:53
True dat.
cali sales tax is like 7.5% BC is 12% lol Above 55k CAD is 15%+
This guy.... [Graham Stephan] is someone who has really got a sane mind. He knows the best, golden, advice for handling money. I know that flipping houses is well-worth it and profitable. But, how he is an agent, that is unbound knowledge. I really would like to be a landlord. These videos I've been watching with him talking about real estate are pure gold. These are the things I hear my grandpa talk about. I am never disappointed from the tips this man preaches. I wish everyone I knew watched these videos about how to basically not sell yourself out of your savings. Give it up for Graham!!!!!
I'll always buy at least one car because I LOVE tinkering on it. I kept my first car, a 2002 saturn, running for 9 years. It's not a great car, but I had so many memories that it hurt when I had to part with it last year when the engine spun a bearing due to an oil leak that got too large because I didn't find it in time.
One day, if I'm blessed enough to get there, I want to own a 1969 Nissan Skyline KPGC10. Skylines have always been my favorite, I'd love to drive the R32, but if I had to pick only one to own it would be the 1969 KPGC10.
Do you think the average just out of college no experience but been into the career since a young age can ever become rich in around 6 years ?
Yes. But you’ll need to do exceptionally well during those 6 years. Likely you’ll need to make about $1.8 million to be left with $1m after taxes and expenses.
Yeah mostly in a dream. Bring rich is different from making a career and slowly gain momentum in making money
Lol at Jay Leno vs tai Lopez
Los Angeles is 9.5% sales tax. Where I live (Canada, Ontario) it is 13%, and that's middle for the country.
Yikes
As much as I wanted to buy the car, I ended up leasing but I'm pretty happy that I lease instead of bought it, newer model in a few years lol
How am I gonna drive for free if I have to pay for fuel !! DISLIKE UNSUB !
"GRAHAM! YOU FORGOT TO MENTION INSURANCE COSTS!! SCAM!!!!"
I guess common sense just isnt so common. Why on earth people just expect to find some lifehack to get free fuel is beyond me
I’m just here to help u with the UA-cam algorithm
thanks!!
If u intend to keep the car for a long time/ don’t enjoy swapping cars every 2-3 yrs then yes ‘purchasing’ makes sense. However if you’re the opposite then I’d recommend leasing. And even IF u own the car, let’s assume something came up and u needed to free up some money- you would have lost a lot of money/ depreciation had u purchased
An example is a friend of mine who paid 32k cash for a Golf R. After 10 months of ownership he had to free up money for a property, so he sold the car for 26k. That’s 6k he lost in under a yr. now in contrast, current Golf R leasing deals are £319 pcm. So that’s around £3,820 per yr (had he leased it) vs (6k) purchase
So these old videos is where all the real gems are hahahah
if you drive a lot and don't plan on ever selling for like 10 years you should buy
Agreed!
“When you finance the car.... you basically finance it...” ~Graham
Toyotas offroading trucks, Jeep wrangler 2D/4D both have excellent depreciation value
I'm going to make this one really simple for you. Do you have a normal commute, want a "luxury" car with little hassle and a new one when a new model comes out then lease it. Do you commute more, want a economical and dependable car you plan to keep for a long term then buy it.
, Honestly It was a tie🥈
Buy ETH beat you by SECONDS.
Does that mean I can purchase a car in Montana and just have it here with the plates? 🤔
Technically no. You need to keep the car in Montana. Do people not comply with this and break the law? Yes.
It would have to be registered and insured in that state
I know here in Chicago and cook county that If you purchase a car out of state thinking you’re saving. You get taxed again to have it registered in cook county il
Jason Pe what about your drivers license and proof of residency???
christopher kibler If you own some property there just establish an llc and buy it through that.
Actually don't because I didn't know it's super illegal 😂
In Minnesota the buyer has to pay the full value of tax on the vehicle when leasing. It really sucks!!! Hence a $40K vehicle at 7.25% tax is $2,900 or $85/mo added to the lease. I learned the hard way.
Really? I’ve never heard of that!
Graham Stephan Yep... in MN. I didn’t realize it till I signed the papers. When I leased in CA and FL... it was tax on the payment not entire value of car.
It sounds like no one should lease a car unless you're rich. Because the comparison of a lease is "buying a new car and selling it 2-3 years later." Only rich people should do that. Everyone else should buy a used car.