Another reminder as a mechanic- just because you can afford to purchase a car, doesn’t mean you can afford to own it. I come across a lot of Benz owners who can’t afford repairs. Maintenance costs can vary widely between different vehicles
Huh.. I have a Benz (C200 CDI Grand Coupé from 2004) so either you mean newer cars or Germany has wildly different prices. Just the quality and sturdiness of the car have outperformed any other vehicler I or friends of mine owned.
Or, listen to me. DiY... i can afford my car plenty times over.. but I go to the dealer and they charge me 1800 for discs, rotors and pads... i did it for 800 with better parts than OEM.... Once for emergency went to an auto zone and they charged me 500 $ to replace a small 60$ hose that took em 20 min to replace... but they broke my turbo inlet .... lol I ended up getting a refund and placing a way better inlet and replacing turbo... Its better you learn to do work on your vehicle because mechanics now a days are cutting corners..
I purchased a used BMW a while ago and it was problem free for 2 years until it hit about the 70k mileage mark....after that the maintenance on that thing was AWFUL. Beautiful car when it was working but every year something would break and cost $1500 or so, not to mention the premium gas and the high end specialty oil changes and butt expensive awful run flat tires. I agree cars can be hit or miss and when they are hit they are problem free and last forever, but if you are unlucky and get a "miss" car it is an expensive miss.
Like less than 1% of people know how to or have the confidence to work on their own cars, this is something you are lucky to be able to do in order to save costs. Most aren't technically savvy enough. @@jaguare18 It doesn't apply to most people.
Yes, if that car was bought new and you know the entire history of it and it also is running well with no issues. I would never buy a used car from someone else. Buying new and running it into the ground over the span of 12-15+ years is the way to go.
No way, buying CPO from the dealer at the 2-year under 20k mark is absolutely the way to go. The first 2 years of depreciation on a new car is absolutely horrendous on most models and basically throwing away 10-20k @@TheGamingAudiophile
Back in the day, you used to watch out for balloon payments at the end of your car loan. You might pay $200/month for 4 years, then owe $2000 as your final payment. You would basically pay off the loan, then be screwed in the end and the dealership would repossess your car, which they could then resell. I think of leases as modern balloon payments. The "$4000 due at signing" being the up front balloon payment and after paying for 36 mos (or whatever the lease period is), you own nothing and the dealer can "resell" the car. They're always looking for ways to sell the same car twice.
I worked at a dealership for some time in the last few years. Never saw a balloon payment on anything, and if you had good credit you didn't need a down payment on a lease. All the payment did was reduce your monthly.
I think the signup payment for lease is due to the fact that the car loses value the moment you drive off the lot. They just want to protect themselves in the case the buyer don't pay a single payment after driving off. In a sense, it makes sense.
Very well balanced video. There is nothing wrong with owning a nice car, so long as you understand how much you are really paying and can afford it. If your financial goals/budget don't allow for it, don't.
I just skimped out of buying a car. I cycle to work, travel from city to city by train and use my cheap ass motorcycle tot go to obscure places far away. If I need to haul something I rent a van for a couple of hours.
I lease a car for my wife for the last 20 years. I can write off 100% of the payment as tax deduction and European cars repairs are not worth it after the warranty runs out because of the cost of the repairs. There is a reason why 67% of Mercedes and 77% of BMW's off the lot are leased. I purchase my car because I drive a lot and lease would kill me on the mileage. Unless I'm buying a GLS or a Range Rover, I'm leasing the car. GLS and Range Rover qualifies for 100% write off even when purchased because of the weight loophole. If you own a business, you will know this rule.
Woooowww you guys seriously have perfect timing!! I was seriously considering leasing a new vehicle asap as my company is putting in place a new return to office policy in September. Thank you for all the information! I especially liked the "Lets run the numbers" bit! You guys are amazing!!
return to office policy? fuck that. I quitted my last employer because of that. I save so much from working from home, that even if they paid me more, it wouldn't be worth going back to the office.
@@189Blakeexactly this. I'm 28, earn $115k and fully remote. After a crash I bought a used 2016 Altima cash. Commuter car. I love being remote and get so much done in half the time and no more wasted hours commuting, office talk, dressing up just to work on a computer, gas, food, etc. I've been offered $140k but fully onsite. Ran the numbers and after costs wouldn't be making much more than now, and quality of life would nose dive. Turned it down. My company was remote before the pandemic so should be fine.
Where are y’all getting leases?! No money down is required and my interest is .04%. I do take care of my car and don’t drive much. It’s also super easy to get out of it, you can sell your lease to another company and trade in for a newer car or finance (not like I would recommend). Lastly, there’s no penalty to purchase your car at the end of your lease.
My mom purchased a lease on a new car when I was in high school because she was tired of dealing with repairs, etc once she was done paying off the loan. She did all the math and made sure to account for the correct mileage (traveling to work, visiting relatives on holidays, etc) but we still ended up going over the allotted amount. For the last year of the lease, my mom hardly drove the car and I wasn't allowed to use it because each additional mile was so expensive. We lived in the countryside (and this was before modern internet) so it was terrible. Essentially, for the last year of the lease, we were stuck in the house while "our" new car sat in the driveway. Edit: The reason we went over our mileage limit is because we had a few family emergencies that required a lot of driving to different relatives' houses of whom lived out of state.
My mother was somewhat in the same situation but with a brilliant solution; she bought me an 80cc 2-stroke scooter. Scooters are awesomely cool and practical to a teenager. More than a few people at my school had scooters as well so we were...a scooter gang!
I love the callback. It really highlights just how Philip has gone from looking the front man for a Weezer cover band to a front man for a Foo Fighters cover band.
Thank you so much for this episode! I've been dreadfully confused for the longest time why people lease cars. And when I'd ask them about it, they didn't have straight forward answers about whether you own it or not, and how repairs must be done
This unfair comparison should not be used to make any decision. The leaser pays more because he is leasing a new $40,000 car whilst the other guy is buying a used car for $20,000 of course he will pay less.
@@oldboy9949you seem like you know a lot about leasing, please help, my dad said he could buy me an ok car or he could lease a brand new 2024 Lincoln nautilus for me. Btw I have 3 years till I graduate university.
It really all depends on your use case. If you want something to get you from A to B and you plan on keeping it forever, then buying and financing a used car is probably the cheapest. With certain brands, it's better to just lease it because maintenance and repairs are crazy expensive. With EVs, you should definitely lease. If the battery dies, that will probably mean the car is totaled because the price to replace the battery can sometimes cost more than the price of the car. EVs also depreciate the most out of all other types of cars.
The US needs to wake up to the reality that car ownership is a money-sink that will only get worse over time between the cost of fuel, insurance, and maintenance. Rather than pushing the costs of participating in society to an individual person to own a car, we should be building infrastructure with affordable and reliable mass-transit for long distance and safe pedestrian/small vehicle paths for shorter distances. We can start moving in this direction by reclaiming local car lanes for smaller personal vehicles like scooters or e-bikes. This would not only help individual finances, but also start reversing emission trends that are cooking the planet.
The social cost (free parking, humongous highways, roads everywhere) is also really high. Car ownership is just really high regardless of who pays the cost.
Agreed. If one is paying attention, this video should be a knock against the normalization of "car-centric/car-dependent" infrastructure. Best of luck if we're willing to continue down this road, so to speak!
@@yabbaguy Ugh, it's not luck. It's a perfectly predictable outcome if government policy is to continue supporting cars to the exclusion of everything else. And it's not exactly stupidity so much as profits today, cost tomorrow.
I'm lucky enough to both WFH and live in one of the only US cities with a good transit system. If I was suddenly carless, I could take months to save up / compare options / find a good used deal and it wouldn't cost me my job or quality of life. Most of the US is constructed to keep people trapped in expensive cycles of car buying/repairs - just a few days without transport and you can lose your job. We should push for better options for everyone!
CPA here. If you finance a purchased vehicle, you deduct the loan interest and the vehicle depreciation (sometimes all at once in first year). Usually better tax benefit than lease payments.
@@rodneyroque4129but technically dont everyone use their cars to go work for a business? Most people do 1-2 hrs a day just on commute alone. I dont see how they would be able to prove otherwise
@@ChrisGoldie commuting to work is not considered a business expense. It’s showing up to a job that employs you. If you own a business and use the car for business (showing up to potential/current clients, vendors, etc) then this is different and can deduct the vehicle expenses
@@rodneyroque4129 i know the rules im just pointing how that doesnt make sense. Lhh yes you dont own the business but that is a business expense by definition. If i had money yo lobby for something in congress changing this would be one of them. Seeing as the cars in this economy is some of our biggest expenses this would definitely help out
What i did after my wreak in 2020 is i got a certified pre owned(CPO) 2015 toyota camry hybrid for 18k and ive paid half of it now in 2023 and its been problem free. Hybrids for toyota dont have drive belts the brake pads last around 100k miles so i do the 5k oil changes and all the flushes( including transmission and hybrid coolant) and the thing feels so good almost new still. (50k miles is when i flushed everything for about 1.5kusd.) at 77k miles now.
Would love to see the “run the numbers” factor in EV tax credits with the IRA. For example, if you buy a Hyundai EV, you don’t get a tax credit because of IRA rules. But if you lease it, the dealer can get a $7500 tax credit which they can pass in part or in whole to the person leasing the car.
Ran the numbers for my Jeep 4xe lease vs finance vs cash Lease was the lowest total cost after buying it at the end: $75,285 Buying the car outright: $77,058 Financing over 60 months/5.5% with ~20% down: $86,624 Leasing was the best option for me given I received 5.5K in rebates for leasing, in addition to the 7.5K EV credit (I make over 150K, so I don’t qualify when filing my taxes)
If you have a car in working order, drive it ... and set aside $540 a month for repairs and eventual replacement. I don't understand borrowing to upgrade.
I bought a new car in 2020, replaced my 15 year old, 200k miles Chevy with an oil leak. I wasn't going to fit 2 car seats in that thing, so I needed something bigger. I financed as much as possible, because then I get to keep the money and invest it. As long as your expected investment ROI is higher than the offered APR, then financing is the smarter move. My APR is 0%. Debt can be good. If the interest rates on your debts are lower than your ROI, then use that money to invest and keep the investment income.
@@sonicpsycho13 Your APR 0 is an artificial discount from the (inflated) retail price. Interest rates are increasing, so today this might make sense. Your investment income is probably at least partially taxable, so watch out for that. You're atypical, of course. More typical is to finance the largest monthly payment you can bear.
I really appreciate y'all adding in the cost of repairs for this video. That's honestly something I was really curious about with your other video on buying a used car vs a newer car. Since the older a car gets the more you'll likely have to pay for expense repairs/maintenance. So I'm always curious how that fits into the equation as well.
It varies wildly by car brand. Jeeps are maintenance nightmares but Toyotas are efficient workhorses. A Camry or a Yaris often needs routine maintenance but you get a lot of life out of them.
@@hurricaneofcatsI can voucher for my Yaris. I own it for 5+ year and only fix timing belt and arm control. Drive daily of 90 miles a days and haven't die on me
Get a Toyota, very little repairs, just do regular routine oil changes and maintenance and consumables like brakes and tires and you’ll be saving money
Owner of a 2010 Lexus IS350 here. I bought it in 2012 and it still runs great. Some parts have needed replacing, but nothing major. Over the life of this vehicle, I've probably averaged like $50/mo on maintenance and repair combined. So, yeah, car brand really makes a difference.
Just got my first car. It costs me $60/mo. My biggest financial tip to achieve similar numbers is to have the car handed down to you for free and only get the liability insurance because it's a 25 year old piece of junk. I love my car ❤
@@Fools_Requiem No loan, as I said it was handed down to me. The car is probably worth $3K at most if I were to try and sell it. The $60/mo is mostly just insurance.
3 Scenarios you should lease instead of buy (as long as you have good credit and predictable low-average mileage): 1. You should only lease European cars. Rich people are smart they don't want to own a European car or SUV outside of its warranty, it's very, very, very expensive. Nearly half of all European cars are leased because they don't want to own an endless money pit. On a related note, don't buy a used European car period. 2. You should lease electric cars/SUVs/trucks. EV residual values are hugely volatile and you must factor in battery degradation. Federal EV tax credits have changed so you won't get the Federal EV tax credit unless it's built in the U.S., Mexico, or Canada. Foreign-built EVs can still get the tax credit through leasing but not buying. 3. You want to have a new car every 3 years, you should lease instead. If you buy a new car every 3 years and trade it in before you pay off a 5-6 year loan you will lose money in every trade.
I remember driving around Florida in the 1990's and seeing the words "Lease" on the bottom of the license plate where normally the county name would go and you could easily tell who was leasing their cars. I'm pretty sure their is no Lease county in Florida.
Love your guys’ videos! I’ll feel better driving my 15-year-old van today, while looking around at all the newer, fancier vehicles around me. We were blessed to be able to buy it for cash 8 years ago, it still works, and even still looks good-just not new. I already knew about how bad leasing is, thanks to Dave Ramsey, but I appreciate the reinforcement!
Leasing is almost always better than buying for a new car if you like having a new car every 2-3 years. The main benefits are: 1. Many automakers subvent leases because it tends to attract repeat customers. This means artificially boosted residuals, discounted interest rates, or bigger discounts. So you're literally getting the car for less. 2. In most states you only pay sales tax on the lease payment, not the entire car. This can be thousands of dollars. The video is very misleading. They don't understand the financial benefits of leasing at all.
@@gamesguyI am based in the UK and leases are priced to move volume so much cheaper than buying even second hand if you don't mind what go get and play the leasing companies off against one another. I pay less than 250 USD/month for a new SUV?
@@gamesguy agreed, you make some good points. I replied to a guy on another thread basically breaking down how leasing was $2000.00 cheaper than if I was to buy the car outright due to the incentives being offered for a lease. And it was 11K cheaper than financing at 5.5% over 5 years Leasing to buy is usually the best option if there are rebates involved. Only thing is you need to pay the full amount after 3 years
Used cars are typically the best option for most people. A 5-10 year old car can still be extremely reliable. I am not a big fan of payments of any kind.
as someone who just had to shell out $2,700 for a new exhaust system im heavily considering leasing my next car. i just hate all the maintenance. i just feel like after you add it all up, ive paid 30% of what the car is worth on unexpected maintenance needs. it’s a financial headache. i dont need to have a paid off car as an asset. how does that do me any good if the asset continues to depreciate? for my own peace of mind, i think leasing makes more sense to me
One thing that they didn't mention in the video is the cost for insurance. Used vehicles can be a lot cheaper to insure. I drive a 2001 Toyota 4Runner and pay $120 per year for liability insurance. My dad bought a brand new Chevy Blazer and was paying $1800 a year for insurance.
Insurance cost factor, aside from the driver him/herself, has a lot less to do with the cost of the car but the accident rate regardless who is at fault. It sounds unfair, but it is true, you can have perfect driving record and own a 10years old infiniti G37 that worth $15k today, but your insurance will cost you more than a branch new mercedes C300 you just bought for $45k. I know this because I literally replaced my G37 with C300 this week. The reason is because G37 has way higher accident rate that insurance companies know whoever is driving the car will likely get into an accident with 1-3 years
This is true but what you aren’t factoring in is risk. If you are in an at-fault accident, best case scenario you have to pay out of pocket for your car repairs, worst case scenario the car is totaled and you get no money from the insurance company. It’s always best to have full liability if you can afford it.
That’s bull, I have a 2023 Mazda CX-5 and I’m paying $80 per month for full coverage. Y’all are getting scammed. Newer cars have better safety features so as long as it’s not a luxury car, you have good driving record and good credit then u shouldn’t pay too much.
We've settled into our 90s cars, bought for a couple of grand each 10 or so years ago. With only a small annual budget for consumables and repairs (there's not much to go wrong, if you choose wisely), we're enjoying driving modern classics that are now appreciating and can still impress. Win win.
I'm thinking about buying a used Tesla. 2021, 46k miles, for 26k. There is a used EV credit for $4k is the sticker price is 25k or less, is this a good deal?
Same thing in Italy, six years ago I bought a used car in cash, spending 10,500 euros while a colleague spent almost 30,000 euros in 3 plus 3 years of rental. incidentally, my car still runs great while my colleague is about to start another 3 years of rental...
@@TheVirtualObserver my rules for buying a car are: 1 cash only 2 maximum price equal to half of my net income for a year 3 I must have available cash that is at least three times the amount I spend
Lease agreements calculate the value you have to pay based on the predicted depreciation of the car over the lease term. This depreciation, treated as a debt, is subject to interest rates and fees, which are influenced by your credit score. Depreciation underscores the financial risk associated with owning a car, as its value diminishes significantly in just a few years.
Thanks for the infos! It highlights the importance of considering not just the monthly lease payment but also the broader financial implications, including interest rates, fees, and the predicted depreciation of the leased vehicle.
I think if you plan on buying the car at the end of the day leasing could be very helpful! in 2016 i got into a car wreck and my car was totaled. i couldn't afford a new car outright or wait for the perfect used car. I had a very limited month to month budget so the monthly payment was most important. I wanted to buy a hybrid due to getting more out of a tank of gas and how expensive gas is it's important (it's $5/gallon rn). Whatever i got i was planning on purchasing outright. at the time it was significantly cheaper to lease than buy. And you can't lease used cars. so the monthly payment of a brand new prius was actually much less than financing a used prius with the same money down. At the end of the term i got some help purchasing it, but it was definitely the right choice imo. so if the interest rates you can get are low or have a deal for a lease (which i often see) and plan on buying the car outright after the lease is up, it may be worth it still. like say leasing an electric or something significantly more fuel efficient, but is out of your price range, the savings could definitely outweigh the extra expenses. I don't see the point of going lease to lease though and never owning. Hell I wish if you are a renter and stay there x amount of years you'll get an offer to own your condo/house. that's essentially what a lease is. That money isn't thrown away unless you throw it away.
Should have waited for that perfect used car. You could have ubered unless middle of nowhere. I know cuz my friend was doing this. Took him 3 months but got a way way better used car and he didn't pay all that premium. It worked for you but the ubering would have been a better option.
@@djm2189 wasn’t a real option honestly. I had 1 day to find a car and ubering is expensive. Just adds to the cost and subtracts from the down payment. Granted looking back maybe it would have been better? But based on stuff at the time this was probably my best option. Granted I didn’t expect a pandemic and a million other things that happened that probably favored holding off and getting a higher mileage car because I would mostly be working from home😂. hindsight is 20/20
@@CreativeMindsAudio haha! Totally. Too short a time to really plan. I think it worked best for your situation but also leaving the comment for others in that situation. A few months is all most need to find and get a great cheaper car, so the upfront and small premium of Uber will easily outpace getting something above their means and or being locked into a lease when most people's situations get resolved in a few months. Really glad it worked out for you! And to anyone else, run the number and be honest. Yes ubering sucks and "feels" expensive but the outcome will be far superior. Good luck y'all!
@@djm2189was in this similar situation during covid and took the uber route. Long story short It wasnt the best move 😂. When covid hit every dealer decided to upcharge every car and wasnt budging. And ubers wasnt as cheap as u would think either. The cost of ubers were starting to add up and dealers continued to hike prices up. Which is why im not too mad that dealers are having a hard to clearing their inventory 😂
What about buying used cars right now - many are going for over the original msrp with thousands of miles on them, and a new model may be roughly the same cost. Would it worth it to buy new vs used in cases like this? I know in your original video, buying a car 5 years old is best - but feels like that may have changed.
I know right? I would love to get a used car at an affordable price, but used cars are now going for prices near brand new car prices as well as high mileage useage... I'm still saving up by commuting but if somehow car prices don't go back to normal, it seems more reasonable to just purchase a new car in the lowest price possible and make sure it is being maintained properly, like oil changes, tire changes, etc. If used car prices aren't so crazy I would have already got a used car already and paid for in cash in full.
Cars last much longer than they used to. A well cared for car will easily go over 20+ years of service and 300,000+ miles. Had an 04 I just got rid of with 260k that still ran like a top. Plenty of cars 10k or less on auto trader that would be reliable choices. Toyotas, Hondas, etc. with less than 150,000 miles. It’s not the 1980s anymore where most cars fall apart before they even reach 100k.
So, I am actually leaning towards leasing (12-month) because I may move away to another country for X period of time. So leasing should free me from having to sell the car or planning for its storage etc while I am away for a couple of years.
I got a lease recently and it works for now. Didn’t have the money to buy a vehicle, was able to get electric car leased for 1year during which electricity charging is free. monthly payment is less than I was paying for gas. But I will look to buy after this because I doubt I’ll find the same deal.
Now listen carefully. My employee leased a Ford escape. Sometime later, it was recalled. Owners ended up paying $3300 for the repair. Because of the lease, he paid nothing!
I am actively considering second hand lease vs second hand purchase and this video was not helpful. For starters, comparing new lease vs second hand purchase is dubious. Secondly, convenience is not just a luxury if you need to take time off work to take the car in for service.
Spot on! I'm fortunate enough to have finally paid of my car and boy does the money start adding up in your favor! I've had my car since 2016 and I would be surprised if I'm any where near 2k let alone 10k in the last 3 years.
Simple advice if you are buying like economical cars like Hondas and Toyota it just makes sense to buy a new one coz of their warranty, reliability and low depreication compared to other brands. Any car over 30k you should think hard about depreciation and resale value fore sure.
My lesson learned after financing vehicles, if you can’t buy it in full, don’t finance it. I’d be free from my truck payment in two months (free of any debt for that matter), and plan on never going back. Can’t wait for the raise I’ll be giving myself 😅
you wanna save money? Don't have a car. Who wants to drive around in a 9 year old shitbox to save money and constantly worry that important parts will need replacing....
I bought a 94f350 last year.... It had 95k odo and we're at 98.5k now. Sure, it practically takes gallons per mile, but it's a hella nice running truck, can do literally anything i ask, and I drive a semi, so im typically only able to drive it on weekends so Idgaf about gas prices. Best 9k I ever spent, and i spent 2k getting the brakes redone. Hoping to rebuild, repaint, do a bit of extra work one day... No matter what, im pretty sure it'll cost less than a new truck, and its the truck I wanted. I love this thing.
It is really important to note that the average car these days are SUVs and Trucks. 40 years ago people bought sedans but now they want large vehicles. Average prices are really misleading. Love your content guys!
I buy, and have bought 2 vehicles in my life brand new becaue of a zero percent rate.. Reason is, I keep vehicles 10 years plus. My dad always said, lease is good, then after the lease you drive the car back and have to walk home. Right or wrong, Im 50, works for me.
Due to inflation my 2009 car is still worth what I paid for it when it was 3 years old, 11 year ago. If you intend to keep the car, it always works out cheaper to buy.
Not in this case. With inflation that people didn’t account for, the leases you got before the pandemic would be better and they were totally wrong on the depreciation math.
@chowsquid I do know someone who bought a car on debt for 40k just before the pandemic and sold it a year later for 50k. Rising interest rates are going to fix this crazy "free" money math now, though.
Leasing worked amazing for me, I put 0 down, 0% interest and had a residual value of over $7k in my car. I decided to get a new lease on a better car with that trade-in value, also 0 down and now .4% interest. Plan to pay off residual at end of lease.
I drive a 15 year old car. Paid in cash. No loan. Just insurance, taxes and maintenance. New cars are an illusion. You can usually afford something much nicer if you buy it old and all the money you save is usually enough for maintenance. Insurance and replacement in case of loss should also be much cheaper.
Why would you buy from a dealer when you can pay much less privately? Plus, isn't it illegal? You can always lie saying you'll finance and only change your mind last minute and say... Oh, okay. I will close the deal but I prefer to pay cash.@TheRealCatof Plus, who would finance a 2 thousand dollar car?
@TheRealCatof You never get enough of a discount when paying it off. Why would you need a credit score if you also buy your house 🏡 with cash? Get a beaten up 50k property without a loan and fix it... 🤔
Not all circumstances are the same.... What about an 87 year old who only drives maybe 5-15 miles/week to the grocery store or pharmacy and is unsure how much longer will be able to drive.... 1 month, 6 months, 3 years?? What would you recommend in this case?! My mom has been leasing the last 6 yrs and the lease is about to expire....However, it seems like buying a used car in this case has fewer benefits over leasing a car that includes all the new safety features... please give advice for this particular situation.
This is great! One issue I have yet to see discussed -- Might leasing make sense for somebody who was considering an electric car? Right now it seems that a lot of such cars are running into really expensive technical problems 4-6 years in -- right when a lease would run out. (I'm not currently looking at electric cars -- very happy with my 2013 Honda Fit. :) )
It can make sense if you were already planning to buy a new car and the only way to get the federal tax credit is to lease it in the US. That said, the dealer needs to offer the $7500 tax credit on the lease and it works out closer to a $6000ish tax credit since you have to pay additional fees and interest compared to purchasing a new car.
Honda Fit is darn near the perfect car for most people most of the time. I would only lease an electric car as the batteries don't last a decade and replacing them is ludicrously expensive. Plus electric cars seem much more prone to the subscription model where the manufacturer can brick your car for any or no reason.
If the value of an electric car drops fast after 5 years, I bet that's accounted for in the lease price. The dealership has the data and has done the analysis.
Basically, leasing almost never makes financial sense in the long term. Like they said, you get to roll around with the newest and greatest, but you still pay more on the long term and rarely if ever come out on top financially compared to either financing or buying used outright (even including maintenance costs). Only way to know is to run the numbers.
I've been your follower since your first very 1st video which help solidifies my mindset on buying a used car... I got a used basic jeep for 3 years, and learn so much from its function of parts, parts availability, maintenance, and more, later on... Sold it... Somewhat hard, but as I grew older, I learned to kill sentimental attachment to material things, it's a money trap... So I step up the game, I recently purchased (cash from savings, save and planned for 5 years) a used 1991 Isuzu MU Wizard SUV (US Version is Rodeo) for PHP 80,000 (around 1500 USD) and reconditioned it costing me 100,000 PHP (around 1800 USD) fora total of... Do the math. This dinged and scratched Used SUV may lack tech and specs compared to Modern SUVs but is still presentable, decent looking, and can do the same thing... Power Steering, Power Window, 4x4, Great Suspension, Automatic Transmission, 3.0 Turbo Diesel Engine, etc... And most of all... Can bring you any place you go if you take good care of it. My point is, if I buy a Brand New 2023 Version of this, a 2023 Isuzu MU X will cost me 2,500,000 PHP (around 45,000 USD)! That is CASH, NOT FINANCED MONTHLY PAYMENT! Imagine that! Moral lesson? Almost ALL Shiny Things like New Car a Money Trap, in not financially planned, but a Used One (with proper research, complete knowledge, and good mechanic) can be a Diamond in a Rough! Be Money Wise!
Riding a bike rather than a car would be the best financial advice if it weren't for the vast swaths of car-dependent infrastructure in the US that force people to drive a car everywhere.
It's similar to buying/renting a house. I always make sure there's an option to buy the car at the end of the lease. I lucked out and leased my car that i have now in 2021 right before prices took a huge hike. At the end of my lease, the buy-out amount in the contract will put like $8k of equity in my car lol
I’m hearing a lot of different information regarding leases and financing to own. Like at the end of a lease you can sell the car to another dealership at the cars residual value and if the car has some equity you can keep that for yourself. This video is informative but there’s some details missing. I’ve been researching some community forums and numbers and all it shows is buying or leasing from dealers is not a good idea. It’s a good thing manufacturers are about to begin selling direct to costumers. We can all say good buy to mark ups and add ons and actually buy affordable vehicles. If you really need a vehicle and have to commute anywhere it would be best to research as much as possible.
I’ll always be thankful my grandparents sell their cars and buy new when they get to 100k miles, I’ve gotten very nice cars that are only 4-5 years old for really cheap
My father bought a car in 2013 For my brother he used it for 4 years then he got old enough and bought his own car He gave me the car and i used it for 6 years now And i still use it and i will continue to use it until it absolutely break down for good I love that car so much Sure i did need to repair it once everywhile i mean that is to be expected for an old car as long as u plan for it its nothing serious But what i can say for sure is that it is absolutely worth it to buy a car and to take good care of it treat it as your son
What I would add to leases, if you lease a cheaper car, you don't end up spending as much on payments. In the scenario given, person A chose a nicer car. If they hadnt they would be paying half as much, and at the end of the lease you would have the option to buy the car. After making payments to the dealer and paying that value, your buyout price is much cheaper. Even if you take out a loan you still won't be paying as much as if you had bought it in the first place. If you want to buy a brand new car, try leasing it first.
I leased my last car and couldn't be happier. It had 3 free oil changes and maintenance and very good warranty. It was $300 per month for 3 years. And it was 15k miles. At the end of my least, i still had so many leftover miles and i was able to get more money back from it then the original residual value. I cant remember the math good, but it was maybe total of $5k in 3 years which wasnt bad for a brand new car.
300*12*3= 10800 for a new car lease? These days that's cost of 2009 civic at 200k miles. You must have that kind of deal in an era before corona... Unimaginable now. Try getting anything on 4 wheels at 300 per month lease today.
Look at slightly used vehicles that hold their values well. I got lucky. The used 2019 Golf R I bought in Feb 2020 is worth about the same now as what I paid used with 23k more miles. Other examples are out there with similar slight depreciation or even slight appreciation in this crazy market.
Have never leased a car and never will (unless I get a really bad medical diagnosis and want to go out in style). I understand why people do it - it's not necessarily stupid. I do think though that one of the reasons people lease is that they drastically overestimate the maintenance cost of a vehicle that's between 3 and 10 years old. Sure there are some maintenance costs, and there may even be a few largeish repairs. However it would be rare for this to exceed the cost of a new car. I appreciate that you added the 10K of repair cost, even though I think that's probably well above what it would really cost.
I leased 2 Ford Fusions. I was happy with the decision. $200 a month for 2 years. They way over valued the residual both times and got hosed when I handed back the keys. I was trying to dig out of debt and my 20 year old pickup died. The lease was half the monthly payment to purchase.
Interesting, but there is another point of view (actually my case now). Let’s say we invert the table on Ali and Michael, and they both want to buy a $20k car, but one is new, and maybe less well equipped, and the other one is approved used, but has about 4 years and 25k miles on board. For the lease, where I live, I would end up paying, say 300$ a month at 2.5-3.5% interest, while for the loan for the used car I would end up paying 600$ at 5-6% interest for the loan. If I take the value of the residual and divide it by the number of month I lease, deciding I want to keep the car, I can just put that in a savings account or something getting me a bit more, like money market, bonds, or if I feel adventurous, an index fund. Essentially, in this way and for this particular scenario, leading might end up cheaper than the loan, and I would be left with a car for maybe 3-4 years longer than if I would have bought used. But of course, everybody’s situation is different :-)
Got rid of my car payments with two vehicles owned out right, and a beater to save mileage and gas. My 3 reliable vehicles cost me less than 10k put together, have been reliable for 4 years ive had them, and I never had to compromise on what I need a car to do. I have a 4x4 for camping/rough roads/snow/hauling etc, an economical gas sipping beater gets 38 mpg, and family sedan for long out of town trips. I do work on and maintain my cars myself, so ive definitely saved a ton on repairs and maintenance. Best skills ive got from UA-cam.
Cars made past 2010 don’t last that long whether it be transmission, engine or some others random repair also both (new) cars depreciate a certain percentage once driven off the lot and reputable dealers sell certified pre own at higher tags especially if the cars history is great. I feel like there are some factors missing but overall very informative 😌😊😊 Love these two
Not really a super fair comparison buying a used car vs leasing a new one. You should run the numbers on two people either buying or leasing the same exact new vehicle, and see how that turns out. The numbers will run a lot closer once you include average repairs costs. Sure, buying is better, on average, but if you get unlucky with your vehicle and it gets outside of warranty and you have to make major repairs, leasing can end up being just as good financially, Especially considering the stress of being stranded, paying for the repairs, etc.
Same here, I started with $3,000 now earning $28,300 bi-weekly profits with his trading program. He's really amazing i still cannot believe someone can be this exceptional when it comes to Bitcoin activities.
Should be a simple decision. If You are planning to keep the car only for 2-3 years and don’t want to get a used car even if it is a CPO then just calculate rough depreciation + sales tax vs total amount paid for lease. If the lease amount is close to what the depreciation cost then get a lease. My example would be model 3 vs Bmw 3 series. Lease amount for both was 20-25k. BMW depreciates 20k but model 3 depreciated only 5k. So if You want bmw lease it or model 3 then buy it. I am giving example based on model 3 in 2018 and sold it 2021. Now it could be different scenario.
depreciation isn't really happening where I live. I bought a 2012 car used for $3600 two years ago and just sold it for $5800, no inspection. It's wild out there right now.
I drive vehicles that are at least 20 years old. I do all my own maintenance though and wouldn't think much of changing a motor in a car. I once blew the engine in my '69 Checker on a Wednesday. I pulled the engine out Friday evening after work and drove the car to a car show Saturday afternoon with a different engine in it.
Does the math on depreciation change, given the used car market is now skewed towards higher end($30-40k)? Used cars are roughly 30% more expensive than 4 years ago, and with higher mileage.
How do you feel about leasing an electric vehicle (EV)? I have a 9 year old (2014) Nissan Leaf, with diminished battery capacity. I can still use it for most errands, but it's close to where that will not be the case. The Nissan dealership is not even able to tell me what battery replacement would cost, for reasons I don't really believe and other battery replacement options are inconvenient and expensive. I've been told newer EVs have more reliable battery technology and maybe that's true, but it seems that there might be a financial argument for renting EVs, given the issue of battery degradation.
My car is 5 years old, bought it used over 2 years ago. And boy am I enjoying the no payment lifestyle! It includes what I consider to be the best luxury feature ever; a pink slip with MY name on it. Not a bank's name, my name.
I leased a New 2021 Subaru Impreza Hatchback Automatic then July this year sold it and Made profit. If you're planning on using it for business purposes you get to help write off. Gotta be smart on which car you choose. You need to make sure you can sell a lease agreement before just leasing
6:19 this is so true!!! It all depends on whether you care about all the extra or not. I have a 2012 honda civic and got a 2016 cr-v with camera which is only the amenities I wanted.
This was good, and it might be interesting to re-run the numbers for leases on some of the EVs out there. Since the tech (range, charge speed, etc) keeps improving on newer models, while prices keep dropping, it is possible you could see the value of the car drop faster than the lease is making you pay. Plus, you get the $7500 tax rebate, particularly if you buy as a business. How does it look then?
I need a car for about 1.5 months only. Does it make sense to lease a car for that time or should I keep renting one from Avis/Hertz/etc every time I need to use it? Which would make more sense financially?
My personal choice for transportation is e-bike for the small trips within biking distance. I'm avoiding putting unnecessary miles on my car because short trips are not good for a car's lifespan. The engine doesn't have time to warm up to function most efficiently, and other parts can get worn down by only using it for shorter trips. I got an e-bike for short trips and that saves me a lot of money in gas and future maintenance, and I get some light exercise by riding my bike around. Not not owning a car is better financially but that's not a viable option for most people living in car-dependent cities in North America.
I ran the numbers as well. I calculated total ownership costs over 5 years to leasing THE SAME CAR, and my monthly costs were about equal. I took into account the cost of tire and break replacement, repair costs based on internet info averages, and the opportunity cost of a potential down payment and/or higher monthly payment for purchase. If one lucks out, repair costs could be lower than average, but it could also go the other way. I would also want to pay for CAA here in Canada once my car was no longer covered by roadside assistance, but I didn't include that in my calculations. By the way, if your mileage on a lease is under what you signed up for, you can bargain to receive positive equity. My wife received over $5,000 on her car, and I got $2,500.
This is litterly every new car in UK. Infact you can now lease a used car too. I feel like many people end up in a vicious cycle of debt. Because once the lease a vehicle they will have no money to buy or finance a used vehicle at the end of the lease term. I get asked all the time why I drive around in old rot buckets or newer higher milage cars. In 3 years I did 70,000 miles. Between 3 cars. Along with depreciation and repairs and maintenance. I calculated I spent around £5000. £300 a month gets you a slightly used small-medium sized car with a sub 10,000 mile annual milage. Even at that price in 3 years that's £10,800. But realistically at my milage it would been more towards the £20,000 Mark. Yikes. Even with stuff like you carnt modify the car in any way. Or even get a scuff mark on it. You get a parking scuff. You have to fork out to repair the scuff. Yet if I get one. Eh. I'll sell the car on for slightly less money. (If at all). The other thing is that car gives you freedom to drive when you want. Where you want. Putting a milage limit. Gives you milage anxiety.
I have 3 old, used cars: 1999 Toyota Camry 4 banger. Bought it for $1300 4 years ago at 235k miles. It now has 258k miles and still running strong. 2006 Nissan Sentra 4 banger. 177k miles i bought this past summer for $2k. Runs great and sips gas. 2005 Lexus ES330. Paid $5k about 6 months ago. 165k miles. Runs like a dream. Ive had used, older cars my whole life. I buy a car that needs things done. Brakes, tires, exhaust systems, motor mounts....anything other than trans or engine. I get them at discounts from private owners and fix them up. I may drive them for years or fix them up and decide to sell. I do all the work myself. I actually make a profit most times.
Great video, I was thinking about leasing a car but it makes more sense to wait and buy a used one or a new one. Looks like leasing is just a waste of money.
Another reminder as a mechanic- just because you can afford to purchase a car, doesn’t mean you can afford to own it. I come across a lot of Benz owners who can’t afford repairs. Maintenance costs can vary widely between different vehicles
If you can afford to purchase a car you can afford maintenance.
There is a difference between being able to make the payment, and afford the payment
Huh.. I have a Benz (C200 CDI Grand Coupé from 2004) so either you mean newer cars or Germany has wildly different prices. Just the quality and sturdiness of the car have outperformed any other vehicler I or friends of mine owned.
Or, listen to me. DiY... i can afford my car plenty times over.. but I go to the dealer and they charge me 1800 for discs, rotors and pads... i did it for 800 with better parts than OEM....
Once for emergency went to an auto zone and they charged me 500 $ to replace a small 60$ hose that took em 20 min to replace... but they broke my turbo inlet .... lol
I ended up getting a refund and placing a way better inlet and replacing turbo...
Its better you learn to do work on your vehicle because mechanics now a days are cutting corners..
I purchased a used BMW a while ago and it was problem free for 2 years until it hit about the 70k mileage mark....after that the maintenance on that thing was AWFUL. Beautiful car when it was working but every year something would break and cost $1500 or so, not to mention the premium gas and the high end specialty oil changes and butt expensive awful run flat tires. I agree cars can be hit or miss and when they are hit they are problem free and last forever, but if you are unlucky and get a "miss" car it is an expensive miss.
Like less than 1% of people know how to or have the confidence to work on their own cars, this is something you are lucky to be able to do in order to save costs. Most aren't technically savvy enough. @@jaguare18 It doesn't apply to most people.
0% interest on a used car you own without payments is the best feeling rather than leasing
Yes, if that car was bought new and you know the entire history of it and it also is running well with no issues. I would never buy a used car from someone else. Buying new and running it into the ground over the span of 12-15+ years is the way to go.
@@TheGamingAudiophilelol. You left out sticking with a used car for life but that only applies to those with mechanical skills
No way, buying CPO from the dealer at the 2-year under 20k mark is absolutely the way to go. The first 2 years of depreciation on a new car is absolutely horrendous on most models and basically throwing away 10-20k @@TheGamingAudiophile
@@TheGamingAudiophilenot everyone can afford that upfront price
It's still depreciating while you pay it off
Back in the day, you used to watch out for balloon payments at the end of your car loan. You might pay $200/month for 4 years, then owe $2000 as your final payment. You would basically pay off the loan, then be screwed in the end and the dealership would repossess your car, which they could then resell. I think of leases as modern balloon payments. The "$4000 due at signing" being the up front balloon payment and after paying for 36 mos (or whatever the lease period is), you own nothing and the dealer can "resell" the car. They're always looking for ways to sell the same car twice.
I worked at a dealership for some time in the last few years. Never saw a balloon payment on anything, and if you had good credit you didn't need a down payment on a lease. All the payment did was reduce your monthly.
I think the signup payment for lease is due to the fact that the car loses value the moment you drive off the lot. They just want to protect themselves in the case the buyer don't pay a single payment after driving off. In a sense, it makes sense.
I'm leasing my current vehicle. No baloon payment or down payment of any kind.
Very well balanced video. There is nothing wrong with owning a nice car, so long as you understand how much you are really paying and can afford it. If your financial goals/budget don't allow for it, don't.
I just skimped out of buying a car. I cycle to work, travel from city to city by train and use my cheap ass motorcycle tot go to obscure places far away. If I need to haul something I rent a van for a couple of hours.
That's smart
As someone whose family owns a car dealership. I heavily recommend leasing a car since its good FOR US. 😅
🤣👏🏾 respect the honesty here!
Hahaha exactly😂
Love the candour if you’re not joking 😂
And to potential lessees, “the esteem and fun and chance to pick up hot girls are all worth it” 😂
Parasite
I lease a car for my wife for the last 20 years. I can write off 100% of the payment as tax deduction and European cars repairs are not worth it after the warranty runs out because of the cost of the repairs. There is a reason why 67% of Mercedes and 77% of BMW's off the lot are leased. I purchase my car because I drive a lot and lease would kill me on the mileage. Unless I'm buying a GLS or a Range Rover, I'm leasing the car. GLS and Range Rover qualifies for 100% write off even when purchased because of the weight loophole. If you own a business, you will know this rule.
Woooowww you guys seriously have perfect timing!! I was seriously considering leasing a new vehicle asap as my company is putting in place a new return to office policy in September. Thank you for all the information! I especially liked the "Lets run the numbers" bit! You guys are amazing!!
return to office policy? fuck that. I quitted my last employer because of that. I save so much from working from home, that even if they paid me more, it wouldn't be worth going back to the office.
@@189Blakeabsolutely. I would happily take a pay cut than commute to work.
@@189Blakeexactly this. I'm 28, earn $115k and fully remote. After a crash I bought a used 2016 Altima cash. Commuter car. I love being remote and get so much done in half the time and no more wasted hours commuting, office talk, dressing up just to work on a computer, gas, food, etc. I've been offered $140k but fully onsite. Ran the numbers and after costs wouldn't be making much more than now, and quality of life would nose dive. Turned it down. My company was remote before the pandemic so should be fine.
I hope you find a union. Honestly they need to sell the real estate. Ask for a higher salary though since you are Bing the office to your house.
Where are y’all getting leases?! No money down is required and my interest is .04%.
I do take care of my car and don’t drive much. It’s also super easy to get out of it, you can sell your lease to another company and trade in for a newer car or finance (not like I would recommend).
Lastly, there’s no penalty to purchase your car at the end of your lease.
My mom purchased a lease on a new car when I was in high school because she was tired of dealing with repairs, etc once she was done paying off the loan. She did all the math and made sure to account for the correct mileage (traveling to work, visiting relatives on holidays, etc) but we still ended up going over the allotted amount.
For the last year of the lease, my mom hardly drove the car and I wasn't allowed to use it because each additional mile was so expensive. We lived in the countryside (and this was before modern internet) so it was terrible. Essentially, for the last year of the lease, we were stuck in the house while "our" new car sat in the driveway.
Edit: The reason we went over our mileage limit is because we had a few family emergencies that required a lot of driving to different relatives' houses of whom lived out of state.
Wtf? You pay for mileage?
@@Tate.TopG.Yes, if you go over the allotted amount. He just said that
My mother was somewhat in the same situation but with a brilliant solution; she bought me an 80cc 2-stroke scooter. Scooters are awesomely cool and practical to a teenager. More than a few people at my school had scooters as well so we were...a scooter gang!
@@eligreg99 I didn't pay attention when he said it. That's just crazy.
This is why you have to make sure you get a good mileage limit.
I love the callback. It really highlights just how Philip has gone from looking the front man for a Weezer cover band to a front man for a Foo Fighters cover band.
He must be a fan of Foozer
Thank you so much for this episode! I've been dreadfully confused for the longest time why people lease cars. And when I'd ask them about it, they didn't have straight forward answers about whether you own it or not, and how repairs must be done
This unfair comparison should not be used to make any decision. The leaser pays more because he is leasing a new $40,000 car whilst the other guy is buying a used car for $20,000 of course he will pay less.
@@oldboy9949you seem like you know a lot about leasing, please help, my dad said he could buy me an ok car or he could lease a brand new 2024 Lincoln nautilus for me. Btw I have 3 years till I graduate university.
It really all depends on your use case. If you want something to get you from A to B and you plan on keeping it forever, then buying and financing a used car is probably the cheapest. With certain brands, it's better to just lease it because maintenance and repairs are crazy expensive. With EVs, you should definitely lease. If the battery dies, that will probably mean the car is totaled because the price to replace the battery can sometimes cost more than the price of the car. EVs also depreciate the most out of all other types of cars.
The US needs to wake up to the reality that car ownership is a money-sink that will only get worse over time between the cost of fuel, insurance, and maintenance. Rather than pushing the costs of participating in society to an individual person to own a car, we should be building infrastructure with affordable and reliable mass-transit for long distance and safe pedestrian/small vehicle paths for shorter distances. We can start moving in this direction by reclaiming local car lanes for smaller personal vehicles like scooters or e-bikes. This would not only help individual finances, but also start reversing emission trends that are cooking the planet.
The social cost (free parking, humongous highways, roads everywhere) is also really high. Car ownership is just really high regardless of who pays the cost.
true cars keep you broke
Agreed. If one is paying attention, this video should be a knock against the normalization of "car-centric/car-dependent" infrastructure.
Best of luck if we're willing to continue down this road, so to speak!
@@yabbaguy Ugh, it's not luck. It's a perfectly predictable outcome if government policy is to continue supporting cars to the exclusion of everything else. And it's not exactly stupidity so much as profits today, cost tomorrow.
@@langhamp8912Sarcastic figure of speech, I'm there with you.
I bought my girlfriend's car in cash when mine died. I'm allergic to interest payments!
…okay
Wait, did your car or girlfriend die?
We got the simp master over here
You bought your girlfriend's boyfriend a car?
glad you are not allergic to girlfriend
I'm lucky enough to both WFH and live in one of the only US cities with a good transit system. If I was suddenly carless, I could take months to save up / compare options / find a good used deal and it wouldn't cost me my job or quality of life. Most of the US is constructed to keep people trapped in expensive cycles of car buying/repairs - just a few days without transport and you can lose your job. We should push for better options for everyone!
I love the "Run the numbers" section. This, along with The Plain Bagel is one of my favorite financial YT channels ❤
CPA here. If you finance a purchased vehicle, you deduct the loan interest and the vehicle depreciation (sometimes all at once in first year). Usually better tax benefit than lease payments.
Can't you only deduct loan interest and depreciation if the car is used for business purposes?
@@nerdcave0 correct. In the examples they gave, they said lease payments are deductible but that’s also if it’s for business
@@rodneyroque4129but technically dont everyone use their cars to go work for a business? Most people do 1-2 hrs a day just on commute alone. I dont see how they would be able to prove otherwise
@@ChrisGoldie commuting to work is not considered a business expense. It’s showing up to a job that employs you. If you own a business and use the car for business (showing up to potential/current clients, vendors, etc) then this is different and can deduct the vehicle expenses
@@rodneyroque4129 i know the rules im just pointing how that doesnt make sense. Lhh yes you dont own the business but that is a business expense by definition. If i had money yo lobby for something in congress changing this would be one of them. Seeing as the cars in this economy is some of our biggest expenses this would definitely help out
What i did after my wreak in 2020 is i got a certified pre owned(CPO) 2015 toyota camry hybrid for 18k and ive paid half of it now in 2023 and its been problem free.
Hybrids for toyota dont have drive belts the brake pads last around 100k miles so i do the 5k oil changes and all the flushes( including transmission and hybrid coolant) and the thing feels so good almost new still. (50k miles is when i flushed everything for about 1.5kusd.) at 77k miles now.
Would love to see the “run the numbers” factor in EV tax credits with the IRA. For example, if you buy a Hyundai EV, you don’t get a tax credit because of IRA rules. But if you lease it, the dealer can get a $7500 tax credit which they can pass in part or in whole to the person leasing the car.
Or the dealer keeps the $7500 and also mark up the price.
Ran the numbers for my Jeep 4xe lease vs finance vs cash
Lease was the lowest total cost after buying it at the end: $75,285
Buying the car outright: $77,058
Financing over 60 months/5.5% with ~20% down: $86,624
Leasing was the best option for me given I received 5.5K in rebates for leasing, in addition to the 7.5K EV credit (I make over 150K, so I don’t qualify when filing my taxes)
If you have a car in working order, drive it ... and set aside $540 a month for repairs and eventual replacement. I don't understand borrowing to upgrade.
I get why they do it. U always have a new car and don't need to worry about the hassle of car breaking down
I bought a new car in 2020, replaced my 15 year old, 200k miles Chevy with an oil leak. I wasn't going to fit 2 car seats in that thing, so I needed something bigger.
I financed as much as possible, because then I get to keep the money and invest it. As long as your expected investment ROI is higher than the offered APR, then financing is the smarter move. My APR is 0%.
Debt can be good. If the interest rates on your debts are lower than your ROI, then use that money to invest and keep the investment income.
@@Watch-0w1 I buy new cars, too. But I don't buy one before I have the money to pay for it.
@@sonicpsycho13 Your APR 0 is an artificial discount from the (inflated) retail price. Interest rates are increasing, so today this might make sense. Your investment income is probably at least partially taxable, so watch out for that. You're atypical, of course. More typical is to finance the largest monthly payment you can bear.
Some people are car people. Most people love cars and would like to own and drive newer or older models depending on their tastes. This is for them.
I really appreciate y'all adding in the cost of repairs for this video. That's honestly something I was really curious about with your other video on buying a used car vs a newer car. Since the older a car gets the more you'll likely have to pay for expense repairs/maintenance. So I'm always curious how that fits into the equation as well.
It varies wildly by car brand. Jeeps are maintenance nightmares but Toyotas are efficient workhorses. A Camry or a Yaris often needs routine maintenance but you get a lot of life out of them.
@@hurricaneofcats That's really good to know. Thank you!
@@hurricaneofcatsI can voucher for my Yaris. I own it for 5+ year and only fix timing belt and arm control. Drive daily of 90 miles a days and haven't die on me
Get a Toyota, very little repairs, just do regular routine oil changes and maintenance and consumables like brakes and tires and you’ll be saving money
Owner of a 2010 Lexus IS350 here. I bought it in 2012 and it still runs great. Some parts have needed replacing, but nothing major. Over the life of this vehicle, I've probably averaged like $50/mo on maintenance and repair combined. So, yeah, car brand really makes a difference.
Just got my first car. It costs me $60/mo. My biggest financial tip to achieve similar numbers is to have the car handed down to you for free and only get the liability insurance because it's a 25 year old piece of junk. I love my car ❤
60 dollars a month seems well on the cheap side. How many months is the loan?
@@Fools_Requiem No loan, as I said it was handed down to me. The car is probably worth $3K at most if I were to try and sell it. The $60/mo is mostly just insurance.
3 Scenarios you should lease instead of buy (as long as you have good credit and predictable low-average mileage):
1. You should only lease European cars. Rich people are smart they don't want to own a European car or SUV outside of its warranty, it's very, very, very expensive. Nearly half of all European cars are leased because they don't want to own an endless money pit. On a related note, don't buy a used European car period.
2. You should lease electric cars/SUVs/trucks. EV residual values are hugely volatile and you must factor in battery degradation. Federal EV tax credits have changed so you won't get the Federal EV tax credit unless it's built in the U.S., Mexico, or Canada. Foreign-built EVs can still get the tax credit through leasing but not buying.
3. You want to have a new car every 3 years, you should lease instead. If you buy a new car every 3 years and trade it in before you pay off a 5-6 year loan you will lose money in every trade.
I remember driving around Florida in the 1990's and seeing the words "Lease" on the bottom of the license plate where normally the county name would go and you could easily tell who was leasing their cars. I'm pretty sure their is no Lease county in Florida.
Love your guys’ videos! I’ll feel better driving my 15-year-old van today, while looking around at all the newer, fancier vehicles around me. We were blessed to be able to buy it for cash 8 years ago, it still works, and even still looks good-just not new. I already knew about how bad leasing is, thanks to Dave Ramsey, but I appreciate the reinforcement!
We need someone to buy new . How do you buy used if no one buys new
Great video, but would be curious to see the numbers between leasing/financing the same brand new vehicle
That wouldn't be as comparable because the price points are different. Unless it is shown as a 72 month loan to compare it to 2 consecutive leases
Leasing is almost always better than buying for a new car if you like having a new car every 2-3 years. The main benefits are:
1. Many automakers subvent leases because it tends to attract repeat customers. This means artificially boosted residuals, discounted interest rates, or bigger discounts. So you're literally getting the car for less.
2. In most states you only pay sales tax on the lease payment, not the entire car. This can be thousands of dollars.
The video is very misleading. They don't understand the financial benefits of leasing at all.
@@gamesguyI am based in the UK and leases are priced to move volume so much cheaper than buying even second hand if you don't mind what go get and play the leasing companies off against one another. I pay less than 250 USD/month for a new SUV?
@@gamesguy agreed, you make some good points. I replied to a guy on another thread basically breaking down how leasing was $2000.00 cheaper than if I was to buy the car outright due to the incentives being offered for a lease. And it was 11K cheaper than financing at 5.5% over 5 years
Leasing to buy is usually the best option if there are rebates involved. Only thing is you need to pay the full amount after 3 years
Buy. Period
Used cars are typically the best option for most people. A 5-10 year old car can still be extremely reliable. I am not a big fan of payments of any kind.
But this only works when we have enough generous people who will lease a new car.
as someone who just had to shell out $2,700 for a new exhaust system im heavily considering leasing my next car. i just hate all the maintenance. i just feel like after you add it all up, ive paid 30% of what the car is worth on unexpected maintenance needs. it’s a financial headache. i dont need to have a paid off car as an asset. how does that do me any good if the asset continues to depreciate? for my own peace of mind, i think leasing makes more sense to me
One thing that they didn't mention in the video is the cost for insurance. Used vehicles can be a lot cheaper to insure. I drive a 2001 Toyota 4Runner and pay $120 per year for liability insurance. My dad bought a brand new Chevy Blazer and was paying $1800 a year for insurance.
Insurance cost factor, aside from the driver him/herself, has a lot less to do with the cost of the car but the accident rate regardless who is at fault. It sounds unfair, but it is true, you can have perfect driving record and own a 10years old infiniti G37 that worth $15k today, but your insurance will cost you more than a branch new mercedes C300 you just bought for $45k. I know this because I literally replaced my G37 with C300 this week. The reason is because G37 has way higher accident rate that insurance companies know whoever is driving the car will likely get into an accident with 1-3 years
This is true but what you aren’t factoring in is risk.
If you are in an at-fault accident, best case scenario you have to pay out of pocket for your car repairs, worst case scenario the car is totaled and you get no money from the insurance company.
It’s always best to have full liability if you can afford it.
That’s bull, I have a 2023 Mazda CX-5 and I’m paying $80 per month for full coverage. Y’all are getting scammed.
Newer cars have better safety features so as long as it’s not a luxury car, you have good driving record and good credit then u shouldn’t pay too much.
@@barbaraday7662 your $80 a month or $960 a year isn't too bad but it is still a lot more than mine at $120 a year.
We've settled into our 90s cars, bought for a couple of grand each 10 or so years ago. With only a small annual budget for consumables and repairs (there's not much to go wrong, if you choose wisely), we're enjoying driving modern classics that are now appreciating and can still impress. Win win.
I'm thinking about buying a used Tesla. 2021, 46k miles, for 26k. There is a used EV credit for $4k is the sticker price is 25k or less, is this a good deal?
Factor in the insurance. Premiums are sky high for Teslas
The credit is only valid should you qualify from a tax return POV. Consult your accountant because not everyone gets the $4k max
Same thing in Italy, six years ago I bought a used car in cash, spending 10,500 euros while a colleague spent almost 30,000 euros in 3 plus 3 years of rental.
incidentally, my car still runs great while my colleague is about to start another 3 years of rental...
Sounds like he got the fancier car while you got a car you can keep! 😉
Thanks to your friend someone else will be able to buy a used car. We need more such people
@@prostmahlzeit absolutely yes, in fact after the low sales of the Covid period in Europe we had a lack of used cars and a price increase!
@@TheVirtualObserver
my rules for buying a car are: 1 cash only 2 maximum price equal to half of my net income for a year 3 I must have available cash that is at least three times the amount I spend
Depreciation, such a funny word... I bought a used motorcycle 5 years ago for 6000 EUR, sold it few months ago for 6500 :)
Love how used motos hold their value
...but not their broken owners... Just kidding. Or maybe not.
Lease agreements calculate the value you have to pay based on the predicted depreciation of the car over the lease term. This depreciation, treated as a debt, is subject to interest rates and fees, which are influenced by your credit score. Depreciation underscores the financial risk associated with owning a car, as its value diminishes significantly in just a few years.
This video is very informative and helpful!
Agree!
Thanks for the infos! It highlights the importance of considering not just the monthly lease payment but also the broader financial implications, including interest rates, fees, and the predicted depreciation of the leased vehicle.
Indeed Excellent content
I really appreciate the animations and graphics! Love your content, always full of value :)
I think if you plan on buying the car at the end of the day leasing could be very helpful!
in 2016 i got into a car wreck and my car was totaled. i couldn't afford a new car outright or wait for the perfect used car. I had a very limited month to month budget so the monthly payment was most important. I wanted to buy a hybrid due to getting more out of a tank of gas and how expensive gas is it's important (it's $5/gallon rn). Whatever i got i was planning on purchasing outright. at the time it was significantly cheaper to lease than buy. And you can't lease used cars. so the monthly payment of a brand new prius was actually much less than financing a used prius with the same money down. At the end of the term i got some help purchasing it, but it was definitely the right choice imo.
so if the interest rates you can get are low or have a deal for a lease (which i often see) and plan on buying the car outright after the lease is up, it may be worth it still. like say leasing an electric or something significantly more fuel efficient, but is out of your price range, the savings could definitely outweigh the extra expenses. I don't see the point of going lease to lease though and never owning.
Hell I wish if you are a renter and stay there x amount of years you'll get an offer to own your condo/house. that's essentially what a lease is. That money isn't thrown away unless you throw it away.
Should have waited for that perfect used car. You could have ubered unless middle of nowhere. I know cuz my friend was doing this. Took him 3 months but got a way way better used car and he didn't pay all that premium. It worked for you but the ubering would have been a better option.
@@djm2189 wasn’t a real option honestly. I had 1 day to find a car and ubering is expensive. Just adds to the cost and subtracts from the down payment. Granted looking back maybe it would have been better? But based on stuff at the time this was probably my best option. Granted I didn’t expect a pandemic and a million other things that happened that probably favored holding off and getting a higher mileage car because I would mostly be working from home😂. hindsight is 20/20
@@CreativeMindsAudio haha! Totally. Too short a time to really plan. I think it worked best for your situation but also leaving the comment for others in that situation. A few months is all most need to find and get a great cheaper car, so the upfront and small premium of Uber will easily outpace getting something above their means and or being locked into a lease when most people's situations get resolved in a few months. Really glad it worked out for you! And to anyone else, run the number and be honest. Yes ubering sucks and "feels" expensive but the outcome will be far superior. Good luck y'all!
@@djm2189was in this similar situation during covid and took the uber route. Long story short It wasnt the best move 😂. When covid hit every dealer decided to upcharge every car and wasnt budging. And ubers wasnt as cheap as u would think either. The cost of ubers were starting to add up and dealers continued to hike prices up. Which is why im not too mad that dealers are having a hard to clearing their inventory 😂
What about buying used cars right now - many are going for over the original msrp with thousands of miles on them, and a new model may be roughly the same cost. Would it worth it to buy new vs used in cases like this? I know in your original video, buying a car 5 years old is best - but feels like that may have changed.
I know right? I would love to get a used car at an affordable price, but used cars are now going for prices near brand new car prices as well as high mileage useage... I'm still saving up by commuting but if somehow car prices don't go back to normal, it seems more reasonable to just purchase a new car in the lowest price possible and make sure it is being maintained properly, like oil changes, tire changes, etc. If used car prices aren't so crazy I would have already got a used car already and paid for in cash in full.
Cars last much longer than they used to. A well cared for car will easily go over 20+ years of service and 300,000+ miles. Had an 04 I just got rid of with 260k that still ran like a top.
Plenty of cars 10k or less on auto trader that would be reliable choices. Toyotas, Hondas, etc. with less than 150,000 miles.
It’s not the 1980s anymore where most cars fall apart before they even reach 100k.
Lease luxury cars, buy economy cars. Simple as is.
So, I am actually leaning towards leasing (12-month) because I may move away to another country for X period of time. So leasing should free me from having to sell the car or planning for its storage etc while I am away for a couple of years.
Why not just buy and sell a used commuter car
I got a lease recently and it works for now. Didn’t have the money to buy a vehicle, was able to get electric car leased for 1year during which electricity charging is free. monthly payment is less than I was paying for gas. But I will look to buy after this because I doubt I’ll find the same deal.
Here’s an idea, get a used car. Don’t buy that you can’t afford.
Now listen carefully. My employee leased a Ford escape. Sometime later, it was recalled. Owners ended up paying $3300 for the repair. Because of the lease, he paid nothing!
The car is the new home unaffordable.
I am actively considering second hand lease vs second hand purchase and this video was not helpful. For starters, comparing new lease vs second hand purchase is dubious. Secondly, convenience is not just a luxury if you need to take time off work to take the car in for service.
Spot on! I'm fortunate enough to have finally paid of my car and boy does the money start adding up in your favor! I've had my car since 2016 and I would be surprised if I'm any where near 2k let alone 10k in the last 3 years.
Simple advice if you are buying like economical cars like Hondas and Toyota it just makes sense to buy a new one coz of their warranty, reliability and low depreication compared to other brands. Any car over 30k you should think hard about depreciation and resale value fore sure.
My lesson learned after financing vehicles, if you can’t buy it in full, don’t finance it. I’d be free from my truck payment in two months (free of any debt for that matter), and plan on never going back. Can’t wait for the raise I’ll be giving myself 😅
I leased two cars now. Just got my second one a couple of weeks ago. No complaints.
I love your videos so much. They take something quite complex and make it easy to digest. Thank you!
you wanna save money? Don't have a car. Who wants to drive around in a 9 year old shitbox to save money and constantly worry that important parts will need replacing....
Not everybody lives in a big city
No leasing!
Unless you like throwing away money!
Even better (if possible): no car. A bicycle is soooo much cheaper, you don't get stuck in traffic jams, and it keeps you healthy!
I'll keep this in mind for my 28 mile round trip work commute! @@ProjectPhysX
I bought a 94f350 last year.... It had 95k odo and we're at 98.5k now. Sure, it practically takes gallons per mile, but it's a hella nice running truck, can do literally anything i ask, and I drive a semi, so im typically only able to drive it on weekends so Idgaf about gas prices. Best 9k I ever spent, and i spent 2k getting the brakes redone. Hoping to rebuild, repaint, do a bit of extra work one day... No matter what, im pretty sure it'll cost less than a new truck, and its the truck I wanted. I love this thing.
It is really important to note that the average car these days are SUVs and Trucks. 40 years ago people bought sedans but now they want large vehicles. Average prices are really misleading.
Love your content guys!
Why does it matter what type of vehicle is it?
it doesnt matter the price of vehicles these days, or what the price of cars are, the math still works.
@@petergao6998 is this a serious question? SUVs and trucks cost 2.5 to 3 times the price of sedans.
I buy, and have bought 2 vehicles in my life brand new becaue of a zero percent rate.. Reason is, I keep vehicles 10 years plus. My dad always said, lease is good, then after the lease you drive the car back and have to walk home. Right or wrong, Im 50, works for me.
Due to inflation my 2009 car is still worth what I paid for it when it was 3 years old, 11 year ago. If you intend to keep the car, it always works out cheaper to buy.
Not in this case. With inflation that people didn’t account for, the leases you got before the pandemic would be better and they were totally wrong on the depreciation math.
@chowsquid I do know someone who bought a car on debt for 40k just before the pandemic and sold it a year later for 50k. Rising interest rates are going to fix this crazy "free" money math now, though.
Leasing worked amazing for me, I put 0 down, 0% interest and had a residual value of over $7k in my car.
I decided to get a new lease on a better car with that trade-in value, also 0 down and now .4% interest. Plan to pay off residual at end of lease.
I drive a 15 year old car. Paid in cash. No loan. Just insurance, taxes and maintenance. New cars are an illusion. You can usually afford something much nicer if you buy it old and all the money you save is usually enough for maintenance. Insurance and replacement in case of loss should also be much cheaper.
Why would you buy from a dealer when you can pay much less privately? Plus, isn't it illegal? You can always lie saying you'll finance and only change your mind last minute and say... Oh, okay. I will close the deal but I prefer to pay cash.@TheRealCatof
Plus, who would finance a 2 thousand dollar car?
@TheRealCatof You never get enough of a discount when paying it off. Why would you need a credit score if you also buy your house 🏡 with cash? Get a beaten up 50k property without a loan and fix it... 🤔
Would love a ‘Run The Numbers’ On the tax deductible business expense!! Thanks for this vid :-)
Not all circumstances are the same.... What about an 87 year old who only drives maybe 5-15 miles/week to the grocery store or pharmacy and is unsure how much longer will be able to drive.... 1 month, 6 months, 3 years?? What would you recommend in this case?! My mom has been leasing the last 6 yrs and the lease is about to expire....However, it seems like buying a used car in this case has fewer benefits over leasing a car that includes all the new safety features... please give advice for this particular situation.
This is great! One issue I have yet to see discussed -- Might leasing make sense for somebody who was considering an electric car? Right now it seems that a lot of such cars are running into really expensive technical problems 4-6 years in -- right when a lease would run out. (I'm not currently looking at electric cars -- very happy with my 2013 Honda Fit. :) )
It can make sense if you were already planning to buy a new car and the only way to get the federal tax credit is to lease it in the US. That said, the dealer needs to offer the $7500 tax credit on the lease and it works out closer to a $6000ish tax credit since you have to pay additional fees and interest compared to purchasing a new car.
Honda Fit is darn near the perfect car for most people most of the time.
I would only lease an electric car as the batteries don't last a decade and replacing them is ludicrously expensive. Plus electric cars seem much more prone to the subscription model where the manufacturer can brick your car for any or no reason.
If the value of an electric car drops fast after 5 years, I bet that's accounted for in the lease price. The dealership has the data and has done the analysis.
An MG electric has a 7 year waranty so it does depend on the Manufacturer.
Basically, leasing almost never makes financial sense in the long term. Like they said, you get to roll around with the newest and greatest, but you still pay more on the long term and rarely if ever come out on top financially compared to either financing or buying used outright (even including maintenance costs).
Only way to know is to run the numbers.
I've been your follower since your first very 1st video which help solidifies my mindset on buying a used car... I got a used basic jeep for 3 years, and learn so much from its function of parts, parts availability, maintenance, and more, later on... Sold it... Somewhat hard, but as I grew older, I learned to kill sentimental attachment to material things, it's a money trap...
So I step up the game, I recently purchased (cash from savings, save and planned for 5 years) a used 1991 Isuzu MU Wizard SUV (US Version is Rodeo) for PHP 80,000 (around 1500 USD) and reconditioned it costing me 100,000 PHP (around 1800 USD) fora total of... Do the math. This dinged and scratched Used SUV may lack tech and specs compared to Modern SUVs but is still presentable, decent looking, and can do the same thing... Power Steering, Power Window, 4x4, Great Suspension, Automatic Transmission, 3.0 Turbo Diesel Engine, etc... And most of all... Can bring you any place you go if you take good care of it. My point is, if I buy a Brand New 2023 Version of this, a 2023 Isuzu MU X will cost me 2,500,000 PHP (around 45,000 USD)! That is CASH, NOT FINANCED MONTHLY PAYMENT! Imagine that! Moral lesson? Almost ALL Shiny Things like New Car a Money Trap, in not financially planned, but a Used One (with proper research, complete knowledge, and good mechanic) can be a Diamond in a Rough! Be Money Wise!
Riding a bike rather than a car would be the best financial advice if it weren't for the vast swaths of car-dependent infrastructure in the US that force people to drive a car everywhere.
'07 Ford Mustang, just did 100K miles service on it... Probably own it until I die.
“Driver don’t pick a car, car picks the driver. It’s a mystical bond between man and machine.” Bobby Bolivia
And that's why repos are starting to happen at record levels
It seems like Bobby wasn't very smart.
What I like about these videos is it's "let me teach you, so you can make an informed decision" so thanks!
It's similar to buying/renting a house. I always make sure there's an option to buy the car at the end of the lease. I lucked out and leased my car that i have now in 2021 right before prices took a huge hike. At the end of my lease, the buy-out amount in the contract will put like $8k of equity in my car lol
I’m hearing a lot of different information regarding leases and financing to own. Like at the end of a lease you can sell the car to another dealership at the cars residual value and if the car has some equity you can keep that for yourself. This video is informative but there’s some details missing. I’ve been researching some community forums and numbers and all it shows is buying or leasing from dealers is not a good idea. It’s a good thing manufacturers are about to begin selling direct to costumers. We can all say good buy to mark ups and add ons and actually buy affordable vehicles. If you really need a vehicle and have to commute anywhere it would be best to research as much as possible.
04:13 the real reason why leasing exists
Businesses with the loan also get to take depreciation expense on the vehicle which they neglect to mention
Not necessarily. Otherwise it would be made exclusive to only be able to qualify if you are a business owner
A tax deduction is very different from a tax credit.
I wish public transit was prioritised so people didn't have to spend so much on cars :(
Only a car sales man could figure out how to get a customer to pay interest on a rental. 😂
I’ll always be thankful my grandparents sell their cars and buy new when they get to 100k miles, I’ve gotten very nice cars that are only 4-5 years old for really cheap
My father bought a car in 2013
For my brother he used it for 4 years then he got old enough and bought his own car
He gave me the car and i used it for 6 years now
And i still use it and i will continue to use it until it absolutely break down for good
I love that car so much
Sure i did need to repair it once everywhile i mean that is to be expected for an old car as long as u plan for it its nothing serious
But what i can say for sure is that it is absolutely worth it to buy a car and to take good care of it treat it as your son
Buy a car outright if you can, if you don't have that option then at least put a sizable down payment.
Leasing is just an absolute waste of money.
A lease worked great for me when I knew I would only need a car for the short term. I didn't have to go through the hassle of trying to sell it.
What I would add to leases, if you lease a cheaper car, you don't end up spending as much on payments. In the scenario given, person A chose a nicer car. If they hadnt they would be paying half as much, and at the end of the lease you would have the option to buy the car. After making payments to the dealer and paying that value, your buyout price is much cheaper. Even if you take out a loan you still won't be paying as much as if you had bought it in the first place. If you want to buy a brand new car, try leasing it first.
I leased my last car and couldn't be happier. It had 3 free oil changes and maintenance and very good warranty. It was $300 per month for 3 years. And it was 15k miles. At the end of my least, i still had so many leftover miles and i was able to get more money back from it then the original residual value. I cant remember the math good, but it was maybe total of $5k in 3 years which wasnt bad for a brand new car.
300*12*3= 10800 for a new car lease? These days that's cost of 2009 civic at 200k miles. You must have that kind of deal in an era before corona... Unimaginable now. Try getting anything on 4 wheels at 300 per month lease today.
@@amitgota yup, this was before covid. I was leasing a Volkswagen r line
so for a lease, because you put such little mileage, the residual price was way lower than an equivalent car with those miles?
Look at slightly used vehicles that hold their values well. I got lucky. The used 2019 Golf R I bought in Feb 2020 is worth about the same now as what I paid used with 23k more miles. Other examples are out there with similar slight depreciation or even slight appreciation in this crazy market.
Have never leased a car and never will (unless I get a really bad medical diagnosis and want to go out in style). I understand why people do it - it's not necessarily stupid. I do think though that one of the reasons people lease is that they drastically overestimate the maintenance cost of a vehicle that's between 3 and 10 years old. Sure there are some maintenance costs, and there may even be a few largeish repairs. However it would be rare for this to exceed the cost of a new car. I appreciate that you added the 10K of repair cost, even though I think that's probably well above what it would really cost.
Leasing is almost always someone getting a car that they almost always couldnt afford the payment if it were purchased i.e. renting luxury
@@Striker50_Nah sir I think you’ve just been brainwashed. Most people who lease don’t do it for that reason.
I leased 2 Ford Fusions. I was happy with the decision. $200 a month for 2 years. They way over valued the residual both times and got hosed when I handed back the keys. I was trying to dig out of debt and my 20 year old pickup died. The lease was half the monthly payment to purchase.
Interesting, but there is another point of view (actually my case now). Let’s say we invert the table on Ali and Michael, and they both want to buy a $20k car, but one is new, and maybe less well equipped, and the other one is approved used, but has about 4 years and 25k miles on board. For the lease, where I live, I would end up paying, say 300$ a month at 2.5-3.5% interest, while for the loan for the used car I would end up paying 600$ at 5-6% interest for the loan. If I take the value of the residual and divide it by the number of month I lease, deciding I want to keep the car, I can just put that in a savings account or something getting me a bit more, like money market, bonds, or if I feel adventurous, an index fund. Essentially, in this way and for this particular scenario, leading might end up cheaper than the loan, and I would be left with a car for maybe 3-4 years longer than if I would have bought used. But of course, everybody’s situation is different :-)
Got rid of my car payments with two vehicles owned out right, and a beater to save mileage and gas. My 3 reliable vehicles cost me less than 10k put together, have been reliable for 4 years ive had them, and I never had to compromise on what I need a car to do. I have a 4x4 for camping/rough roads/snow/hauling etc, an economical gas sipping beater gets 38 mpg, and family sedan for long out of town trips.
I do work on and maintain my cars myself, so ive definitely saved a ton on repairs and maintenance. Best skills ive got from UA-cam.
Cars made past 2010 don’t last that long whether it be transmission, engine or some others random repair also both (new) cars depreciate a certain percentage once driven off the lot and reputable dealers sell certified pre own at higher tags especially if the cars history is great. I feel like there are some factors missing but overall very informative 😌😊😊 Love these two
Cars last longer provided they're properly taken care of which we know most people neglect maintenance and then blame the automobile
Not really a super fair comparison buying a used car vs leasing a new one. You should run the numbers on two people either buying or leasing the same exact new vehicle, and see how that turns out. The numbers will run a lot closer once you include average repairs costs. Sure, buying is better, on average, but if you get unlucky with your vehicle and it gets outside of warranty and you have to make major repairs, leasing can end up being just as good financially, Especially considering the stress of being stranded, paying for the repairs, etc.
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Should be a simple decision. If You are planning to keep the car only for 2-3 years and don’t want to get a used car even if it is a CPO then just calculate rough depreciation + sales tax vs total amount paid for lease. If the lease amount is close to what the depreciation cost then get a lease. My example would be model 3 vs Bmw 3 series. Lease amount for both was 20-25k. BMW depreciates 20k but model 3 depreciated only 5k. So if You want bmw lease it or model 3 then buy it. I am giving example based on model 3 in 2018 and sold it 2021. Now it could be different scenario.
depreciation isn't really happening where I live. I bought a 2012 car used for $3600 two years ago and just sold it for $5800, no inspection. It's wild out there right now.
I drive vehicles that are at least 20 years old. I do all my own maintenance though and wouldn't think much of changing a motor in a car. I once blew the engine in my '69 Checker on a Wednesday. I pulled the engine out Friday evening after work and drove the car to a car show Saturday afternoon with a different engine in it.
I envy you... I have zero clue about how cars work, so I have to pay for everything. Still, though, it's much cheaper than leasing.
Does the math on depreciation change, given the used car market is now skewed towards higher end($30-40k)? Used cars are roughly 30% more expensive than 4 years ago, and with higher mileage.
How do you feel about leasing an electric vehicle (EV)? I have a 9 year old (2014) Nissan Leaf, with diminished battery capacity. I can still use it for most errands, but it's close to where that will not be the case. The Nissan dealership is not even able to tell me what battery replacement would cost, for reasons I don't really believe and other battery replacement options are inconvenient and expensive. I've been told newer EVs have more reliable battery technology and maybe that's true, but it seems that there might be a financial argument for renting EVs, given the issue of battery degradation.
My car is 5 years old, bought it used over 2 years ago. And boy am I enjoying the no payment lifestyle! It includes what I consider to be the best luxury feature ever; a pink slip with MY name on it. Not a bank's name, my name.
I leased a New 2021 Subaru Impreza Hatchback Automatic then July this year sold it and Made profit. If you're planning on using it for business purposes you get to help write off. Gotta be smart on which car you choose. You need to make sure you can sell a lease agreement before just leasing
plus paid zero in for oil etc, very fuel efficent. However, I had 800 when I got my lease.
This probably the earliest I seen their videos once it upload.
As usual you put out awesome videos but this time like turns in to love 💖 after seeing Hardik Pandya in this video. @4:32
He is Indian cricket star!
6:19 this is so true!!! It all depends on whether you care about all the extra or not. I have a 2012 honda civic and got a 2016 cr-v with camera which is only the amenities I wanted.
This was good, and it might be interesting to re-run the numbers for leases on some of the EVs out there. Since the tech (range, charge speed, etc) keeps improving on newer models, while prices keep dropping, it is possible you could see the value of the car drop faster than the lease is making you pay. Plus, you get the $7500 tax rebate, particularly if you buy as a business. How does it look then?
I need a car for about 1.5 months only. Does it make sense to lease a car for that time or should I keep renting one from Avis/Hertz/etc every time I need to use it? Which would make more sense financially?
My personal choice for transportation is e-bike for the small trips within biking distance. I'm avoiding putting unnecessary miles on my car because short trips are not good for a car's lifespan. The engine doesn't have time to warm up to function most efficiently, and other parts can get worn down by only using it for shorter trips. I got an e-bike for short trips and that saves me a lot of money in gas and future maintenance, and I get some light exercise by riding my bike around. Not not owning a car is better financially but that's not a viable option for most people living in car-dependent cities in North America.
I ran the numbers as well. I calculated total ownership costs over 5 years to leasing THE SAME CAR, and my monthly costs were about equal. I took into account the cost of tire and break replacement, repair costs based on internet info averages, and the opportunity cost of a potential down payment and/or higher monthly payment for purchase. If one lucks out, repair costs could be lower than average, but it could also go the other way. I would also want to pay for CAA here in Canada once my car was no longer covered by roadside assistance, but I didn't include that in my calculations. By the way, if your mileage on a lease is under what you signed up for, you can bargain to receive positive equity. My wife received over $5,000 on her car, and I got $2,500.
This is litterly every new car in UK. Infact you can now lease a used car too. I feel like many people end up in a vicious cycle of debt. Because once the lease a vehicle they will have no money to buy or finance a used vehicle at the end of the lease term.
I get asked all the time why I drive around in old rot buckets or newer higher milage cars. In 3 years I did 70,000 miles. Between 3 cars. Along with depreciation and repairs and maintenance. I calculated I spent around £5000. £300 a month gets you a slightly used small-medium sized car with a sub 10,000 mile annual milage. Even at that price in 3 years that's £10,800. But realistically at my milage it would been more towards the £20,000 Mark. Yikes.
Even with stuff like you carnt modify the car in any way. Or even get a scuff mark on it. You get a parking scuff. You have to fork out to repair the scuff. Yet if I get one. Eh. I'll sell the car on for slightly less money. (If at all).
The other thing is that car gives you freedom to drive when you want. Where you want. Putting a milage limit. Gives you milage anxiety.
I have 3 old, used cars:
1999 Toyota Camry 4 banger. Bought it for $1300 4 years ago at 235k miles. It now has 258k miles and still running strong.
2006 Nissan Sentra 4 banger. 177k miles i bought this past summer for $2k. Runs great and sips gas.
2005 Lexus ES330. Paid $5k about 6 months ago. 165k miles. Runs like a dream.
Ive had used, older cars my whole life. I buy a car that needs things done. Brakes, tires, exhaust systems, motor mounts....anything other than trans or engine. I get them at discounts from private owners and fix them up. I may drive them for years or fix them up and decide to sell. I do all the work myself. I actually make a profit most times.
Great video, I was thinking about leasing a car but it makes more sense to wait and buy a used one or a new one. Looks like leasing is just a waste of money.