Why Is Leasing A Car Bad?
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- เผยแพร่เมื่อ 24 ก.ค. 2019
- Why Is Leasing A Car Bad?
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I come here every 3 months to talk my self out of leasing a car
Same 😂
As we all do.
He actually doesn’t mention one point: leasing a car could be a better option, under ONE condition: you pay off the lease in full and skip the interest, which is what I do.
@@greenlion6544 then what’s the point of leasing it if you’re paying for it in full? At the end of the lease you still going to have 10-20k of payments and no car unless you want to buy the car for 10k after the lease is up. Leasing is only good for people with money that want to change their car often. My brother in law leases a car then changes it every year or two because he gets bored of it. But that’s the only thing about leasing that’s good. But if you want to build wealth Dave Ramsey is right. I’ve worked at dealerships I know how it goes
@@fuse911 Youhan,
My lease was $200 a month for 36 months so $7200. I paid just under $6700 in one payment. Before the lease ended, I sold the vehicle and after the payoff, I received $2800. Now my monthly average was really about $108 a month, which is what many people pay yearly just on maintenance and mechanic fees. Moreover, I get a new, more fuel efficient vehicle, with better safety features every 3 year, further bringing down my insurance costs.
I love how patient Dave is with people who want to listen and learn
He did not have to re explain it again.
This is retake or these questions just run in circles.
Is Dave also willing to listen and learn?
@@jeanlenor1858 l n no XL
. LP
@@zzgeorgezdane8559 nope 😆 he believes hes right and no one else is lol
*This is actually a really informative and useful video thank you dave*
I leased once and highly regretted it. Got a car that I could not afford otherwise. When the lease was almost done I went in to see what my options were and basically they looked over the car and started pointing out everything wrong with it and how much i was going to have to pay. After 5 years there is going to be wear and tear on a car. I looked on their lot and they were selling my almost exact same care for almost 8 grand more than my buyout. It had more km's than mine and also didnt have the upgraded package. At that point buying the car out was my only option and i drove it until it could not drive anymore...I was young and dumb and could not regret it more.
If you lease another vehicle when you turn in your current one they usually ignore the wear and tear items cause they know they'll make it up with what you pay to lease the next vehicle. When you turn it in and say you are going elsewhere for your next car then they're gonna nickel and dime you to cover the damages if you didn't get the extra insurance on it to cover wear and tear.
@M J ah ok. sounded like you were just sending extra money, not paying for insurance.
Sorry you went through that Mike. Are you happy with what you have now?
A friend of mine told me he leased his car so it would pressure him to quit smoking because he couldn't smoke in it!
@@ThePeterDislikeShow 😂
Leasing a car is a much shorter term business contract and quite often a much less risky business transaction than a typical 60-72 mo loan. A great advantage of leasing is vehicle is 100% covered under warranty both bumper to bumper and powertrain.
Don't forget, when you lease a vehicle, it's conditional financing, they can limit alot of things such as mileage and such for having the vehicle
Leasing is a bad idea and end up costing more after about 5 years vs. buying. The bigger issue is that ppl can’t save enough cash for the buy.
instead of getting a car i found a place to live near my job. Been saving on car expenses since then.
Not bad, but I got rid of the job AND the place to live. Now I just live in my car!
@Rich 91 Nice! Don't forget free medical!
@Rich 91 I did one better I committed a crime in Norway got an upgrade in living and learned a trade skill for free.
This escalated quickly
Thats what i did for the first 18 months out of college - i lived only 30 minutes bus ride away from my office in a studio basement apartment. After 18 months, i had a sizeable amount in the bank but still bought a 5 year old used low mileage vehicle!
I am now a believer that leases are bad, but I did come out ahead on a lease once. It was a Honda Ridgeline. I drove it for four years and sold it for enough to both pay off the residual and have 8K besides! But this was when Honda took a break on making Ridgelines for a few years, driving up the price for existing ones! I basically drove a brand new truck for four years for under 4 thousand dollars total. But I also know that deal will never happen again in a million years.
That's like showing up to a casino, winning your first game, then leaving forever. Haha
@@robertcraft1030 Exactly. W K you lucked out big time man. Lol
Good stuff still though.
Why do u need to believe leases are bad or good? Just do the transaction that makes most sense. Lots of people leasin 2019 accord sports for zero down and 275 out the door....how u gonna best that?
So if it's just basically renting the car long-term, then why am *I* responsible to maintain insurance on it if I don't own it?
You’re responsible for damages at the end of the lease
@@PerunaCox No you aren't. If you lease within the warranty period
All car dealership transaction of sny kind are bad if you don’t know what you’re doing. The people who work there are not your friend. They are running a business.
Correct! They will bend you over the negotiating table if you let them!!
Regardless if you are going to a Mc Donald’s or a car dealership, they are not your friend, and just running a business
I leased a car 2 years ago due to an impulse, and it was a dumb idea. I was only focused on the low monthly payment and didn't understand the interest rate. When I asked the car dealer at Luther what is the interest rate on a lease car? The dealer didn't tell me. But I leased the car anyway. It didn't feel good after I have signed the paper. The next day, I listened to Mr. Ramsey on TH-cam explaining about how lease car works and that leasing is the most expensive way to operate a car. So I learned to calculate the interests rate of my leased car. It costed me 20% in interest rate. I felt sick to my stomach. So I went to my credit union, borrowed $34000 at 2.5% interest rate and bought the car the next week. They charged me $600.00 fee for going through the leasing process. They refused to refund the $600 fee. I was mad at myself for being dumb and felt that the Luther car dealer was taking advantage of me. So I worked like crazy and being gazelle intense and paid the car off in 7 months. Lesson well learned. I Will never ever lease a car again. Plan to pay cash only for a car! Thank you to Mr. Dave Ramsey!
Dont let that one dealership ruin your desicion of leasing a car.
14% is outrageous on the lease and I’ve never seen it . There’s lease calculator available to see the money factor aka “apr” you pay on the lease. A friend asked me to negotiate his lease for him and here’s how it’s broken down
Honda Civic EX
Msrp - 24,000
Negotiated price - 19,900
Residual Value - 54%
Money Factor/APR was 0.00054 = 1.29 % apr
Term - 36 mo/ 12k mi
Monthly payment - $194 + 8.75% CA tax
=$211/mo
$1000 drive off for registration, fees, 1st mo payment
I’ve done many lease deals and everyone of them has had under a 5% finance charge and most under 2%
Not saying leasing is a great financial decision, just saying it’s not as bad as 14%
You left out the $2,000-$3,000 dollars majority of leases require down
MrJimmy3459 i negotiated that exact deal . $0 down, it’s not worth it to put any money down on a lease. All those ads where you put money down is to make the monthly payment look better. Never put any money down on a lease. They only time it’s required to put money down if the vehicle msrp is over $90k
@@RealChunkyMonkey Am I missing something here? Is it bad to put money down in order to shave off some of the overall cost If the car? Or is it just not worth it?
Mosharaf Khan on a lease it’s typically not worth it since basically all it’s doing is making the monthly payment more attractive. Majority of the time on a lease the finance charge is less than 2% (with 720-740+ credit) , it just isn’t worth it unless you plan to purchase the car at the end of the lease.
If your going to buy a vehicle and put a down payment, just purchase one that’s 3 years old with 30-40k miles. Whatever the msrp of the car was new, you should be paying about 60% of that. Ex. $30k car for about $18k after only 3 years
Go to Craigslist find a Honda Civic Ex for 3,000 to 5,000. Watch some automotive care videos on youtube for free and save $2500 a year. or u can dump 2,500 dollars in your craigslist bought honda and have the nicest Ex on the block. or invest ur 2,500 in Retirement or kids college or grandmas dentures so your friend can finally understand grandma at the dinner table just sayn leasing is pointless. I drive a 93 lexus I bought cash for 2,100 dollars, 240,000 miles only care is oil duh and change a fuel pressure regulator which was $24, still have the car still runs.
I just bought this 07 Impala Ss with 150k for $600! Yes! $600. Needed a new Front Bumper,Radiator,Radiator Hose, Thermostat. Did all the work myself ! Saved a grip! Not only I did the work myself ! But its paid for ! Title in hand and don't owe a Penny 2 anybody! Only had it since July 4th! Looked at what one of these cars r going for in good running conditions. Easily over $5k smh I got mines for $600! And no Payments baby!
Yes!! Well done 👏🏽👏🏽
It’s weird because this girl I know bragging about leasing because it’s “cheaper” but she also is against renting & more for OWNING a home .... I want her to make it make sense.... renting is equivalent to leasing bc you paying for something you’ll never own
Not exactly equivalents. at the end of the lease you do have the option to buy it out for the rest of the equity remaining, however due to depreciation most of the time it isn’t worth it
theycallme_oj of course not exactly but just like leasing .... you can rent to own... point still stands... renting to own IS a thing ya know...
CheyTDMartinez exactly .... so basically you agree but found SOMETHING “wrong” to point out...
@@screwedupmystic2597 I know... lol that’s was like a point I was making
I still believe what Dave says but I got rid of my lease bought a used car and have spent so much money on repairs...🤷♂️
Yup. He assumes that a 2k car never breaks down. Buy certified preowned, sell about 10 y/o.
I never understood leasing. Never did it. They ask for money down you don't get back, it's 350 or more a month and then 3 years later, you get nothing. I put money down and paid car off in 3-4 years and own it. No payments. I love that time.
Dave is awesome and his advice can be followed by most people with great financial outcome, however, the advise is very general and not always 100% accurate. If you shop around and know what you are doing there are exceptional lease deals to be had that do not equate to 14% financing. Find a deal with a high residual value and a low money factor (multiply by 2400 to convert to interest) and make sure it’s under 3%. Also, there is a general assumption that for most people a car is just a tool to get them from point A to point B. It doesn’t take into account that some people might choose to spend more money on a car and cut expenses elsewhere as it serves for them as a great enjoyment or as a hobby in life.
I’m on my third lease.
On all three I’ve paid 10% of the negotiated price of the car each year of a three year lease (I.e. each car had a 70% residual value after 36 months). On each one my negotiated price is factory invoice or less.
My interest rate has been 2-3% when you convert the money factor to APR.
So let’s review Dave’s concerns here:
1. Interest rate. I pay 2-3% which is equal to inflation. My money sitting in the bank is “taxed” by inflation at the same rate my car lease is being charged interest.
2. Dave pays factory invoice. I pay factory invoice, sometimes less. You negotiate the purchase price with a lease the same way you would if you bought it (if you don’t you’re getting skinned alive).
3. Depreciation. A $30k car being worth $10k at the end of a lease would have 33% residual value. I lease vehicles that have 70% residual value after 36 months so using the same numbers it would be worth $21k. I’m only paying for the 9k over 36 months + the finance charge. Now the vehicle may only truly be worth $15k but that’s not my problem because my lease is based on the manufacturer’s stated residual.
4. Leasing is the most expensive way to have a car. Yes, it probably is; but when done correctly you can close the gap with the alternatives and it’s the cheapest way by far to have a new vehicle every 3 years (IF you don’t drive more than 12-15k miles every year).
You can spend all day trying to justify a bad decision. At the end of the day it is a bad decision. Just buy a used car in cash and stop worrying about what other people think about your car.
The Dude I save 30% of my income and my only debt other than my lease is my mortgage which is on a 15 year 2.75 fixed. This is an area where I choose to spend a little more because it is worth it to me. I’m just pointing out that if you lease correctly, it’s not as bad as Dave makes it out to be.
Dave buying a new car off the lot for invoice is actually the worst thing you can do; but he’s willing to pay a premium because the depreciation hit to him is a drop in the bucket.
Dave doesnt know sheeet bout leasing cars otherwise he likely would go on LeaseHackr and love it.
@Zoraster
Leasing is only better than buying if you must have a brand new car every 2-3 years which you have stated that you want. I’ve literally sat down and done the math on multiple cars. There could be exceptions but you must be lucky and search a lot. I mean a lot!
If you would buy a brand new car (at or below sticker price) and keep it for 5+ years, then sell the car, you will start to see savings in comparison to leasing in the majority of cases, if not all.
Also you fail to mention hidden costs, maintenance costs, and insurance costs that go a long with leasing a brand new car. If your tires are worn down by the time you give your leased car back, you are going to have to pay for a brand new set of tires for a car you will never drive again. Also most car models stay exactly the same for about 3 years and then they are updated to a new version of the model.
The best way to buy a car is after the first 2-3 years because the car depreciates the most during this period. You can find many cars that are 1-2 years old with low or no miles that are for sale at a discounted price.
Dealerships over charge people for leases, new cars and used cars. They do not discriminate when making money!
Making an informed decision when buying a car based on the cars maintenance history and current value is the best way to buy a car.
If you like wasting your money than more power to you! BTW I think your residual values are a bit off.
Ian Russo your the type of dude to get whacked on a payment when negotiating
dave, thanks for everything
Dave has no idea that most people in the midwest get employee (A plan) price, and only do a 2 year lease. Rebates are often over $4,000 on models that have a newer model year available or coming out soon. For the Big 3, gap coverage insurance comes with the lease. So you have a bumper to bumper warranty, no maintenance costs other than 2 or 3 oil changes and around 20 or 21 thousand miles to use. $200 - $250 a month with $999 down for a $30,000 vehicle can be had most everywhere in the midwest where all the Big 3 plants are. That's not a bad deal for someone who wants a reliable vehicle that they don't have ANY maintenance costs on! Third party and foreign makers do longer leases, which are a ripoff. Stick with 2 or 3 year leases, so the car is always under factory warranty. If the car is totaled or stolen, the gap coverage insurance that came with the lease pays off the vehicle and your lease is over. You don't get your down payment back, so never put much down. Dave is right, however if you are leasing for 5 years and paying $450 - $500 a month...you are getting ripped off and should just buy a 2 or 3 year old car with cash if you can save that much.
robert polk exactly who is leasing for 5 years??? Not here is Michigan we are the 2-3 year state and I don’t care what anyone says it’s cheaper I have done the math and I do not have ANY MAINTENANCE COST🙅🏽♀️ I HAVE NEVER put a down payment on ANY of my leases 🤷🏽♀️
robert polk probably why I was confused as well. Everyone in my family works in the auto industry. I don’t even know what sticker price is at this point 😅
Im paying 200 a month right now for my wrangler. I’m not going to want it in two years and the things don’t depreciate. I’m for sure coming out on top here
Leasing is for those that want to look like they are doing well but cant afford to buy the car. Glorified car rental.
Not always, because if you are able to write off car costs on your income tax, you can write off 100% of the cost of when you uses that vehicle for business, as opposed to a 40% of a depreciating asset. Also since the vehicle’s lease is within the timeline of the warranty, you are not responsible for repairs. For someone who only wants the car for personal driving, leasing is not the best option, unless you want to drive a new car, but if you are in business, it is an option.
@@HamiltonRb Business might be ok for lease...personal use I'd avoid.
You have the same write offs if you purchased the car. Repairs only apply to warranty items, which don't cover wear items of which there are many. Don't forgot mileage limitations as well. Businesses that use leased fleets do so for flexibility in GAAP/IFRS reporting, it doesn't effect the IRS side.
@@T30ThinkPad No you don't, I have been through this with my accountant. Not sure where you live or what your rules are there but in Canada you can write off a higher percentage of a leased vehicle than owning, because their is no residual value to you in a lease.
Totally disagree I lease compact cars so that I always have a warranty and roadside. Works out great for me.
Hi Dave my car has just died. And I was thinking of leasing a van Then I seen your video. So I'm just going to use my emergency fund and buy a runner. Thanks uncle Dave you always make sense and talk the truth. Bless you . Trevor
I can't afford a new car + insurance, leasing is my only option plus it's only 3 years not 5.
Gladys Reyna leasing a car is the best choice (was the only option for me) I only have 1 year left, I know the car won’t be mine but at least the headaches of cost and repair won’t be mine as well. Leasing a car also saved me more money with less road trips, cheap insurance, and overall I consume less now. Another option is Hertz car rental, they went bankrupt and are selling off their entire inventory you might want to look into more.
Good luck
I don’t think leasing is bad. There’s pros and cons with buying, financing or leasing
Pro for leasing?
London Bridge, there’s only cons with financing and leasing and only pros with buying the car in cash. Financing a car or leasing a car is financial prison. You’re stuck with payments for years on end, you don’t get out of it until you’ve served the time of whatever amount of years you chose for your loan (unless you pay it off early, which most Americans don’t do). On top of all that, they hit you with interest plus the car depreciates so much as soon as you purchase it. Why not just save up and buy a car in cash? Then you can continue saving and investing and building your wealth. As Chris Hogan says, “when you have debt, you’re making other people wealthy.”
it's Dave Ramsey:
if the car costs more than 50% of your annual income then it's too much for you.
if you can't pay in full then don't buy.
Leased 4 cars never had a problem. No it’s not because you want to show off and can’t afford the car. Also never heard of a five year lease like was mentioned. I’m a car enthusiast and like having a new car fairly often. So every three years I get a new car. Doesn’t bother me. Doesn’t hurt my finances and I’m happy. But just as an example. I had a lease a couple years ago for a Mazda 3. MSRP was 20,500not including destination. When you include the dealers cash the price was 19,256. 3 year 36,000 miles was 225 a month. Total payments of 8,076 with a residual value of 11,500. So that’s 19,576. So when you finance a car you usually need 0-20% down where this car requires nothing down. Not to mention if you financed it for the same term at 0% interest you would be at closer to 543 on a 3 year term. I get that you won’t own it but that’s pretty clear for most intelligent people. I like Ramsey but I disagree with him on credit cards and leases. Some people like boats, some people like expensive wines, some people like having a new car often. Our household income is over 200,000 for those who will try to call me crazy.
It’s a tax write off, I thought, if u own a business....
You only get to write off a portion of your payment. If you claim 100% of your lease is for business you’re going to get audited unless it’s in a designated fleet. 50% is reasonable, but you’re financing your car at 15% interest for 3 years so there’s no way it pays for itself.
Someone: "I am leasing a car"
Dave Ramsey: "I'm going to make you wish you never said that" 🤣🤣
Was thinking to buy a new car because my old 2005 vw jetta died. I was so confident of taking car loan but when I actually made the math it is horrible bad idea to take car loans or lease!! I was shocked how much money i will actually lose when taking loan. Instead I bought myself used 2007 year volvo with cash and got myself amazing deal. The car hase high milage but was kept almost brand new. I feel so liberated of not taking car loan.
Not to mention the heavy down payment they require to cover some of that depreciation.
but Dave, I'm insecure and competitive so is it OK for me to lease a Mercedes if I can afford the monthly payment? I really want one with the gigantic Mercedes logo on the front grille so I impress people at stop lights 😎
JUST don't get a CLA - the Dollar Tree Mercedes - as you'll impress nobody!!😀
Just go for a bugatti
Never will that impress me.
Just told my girlfriend to not lease a car !!! I did it once and it was a bad financial decision. You go Dave ! Bless you
If you can't pay in cash, then you can't afford it! PERIODT!!!!!!
So if you can’t afford a house either in cash, you shouldn’t buy it? These are low interest rate days and you have to balance what you can well afford
@@HamiltonRb for most things, but house is different i guess.
Pulsar1984 not true. A lot of people lease cars, cause they want a new one every two years. I lease and can well afford to pay cash. I want no maintenance period. Ok, two oil changes and I get a new car.
@@teeduck unless you are part of the 1%, i don't believe that's a smart choice.
@@teeduck Maintenance....spending $450+ a month to save on usually small maintenance cost, and spend that forever. Ok
You mean the money factor (MF) because I would argue that it’s actually better to lease sometimes- even if you plan to buy the car out. Why? My Infiniti lease MF for example = 0.00003. Multiple by 2400 to get APR %. So I’m essentially paying 0.072% APR for 39 months lease/“loan”. Also time your lease at the end of their calendar year so you get the lowest residual value %. How do you know? Looked up the manufactures leasing program and once the residual hits 50%, it’s time to get that car.
If you own a business, i would lease the company car. For personal cars do not lease at all!
Just curious, why?
This is true. Easy write off and convenience pays for itself. For a business you don't want to be saddled with downtime on fixing old car issues, plus most luxury car leases come with concierge service to pick the car up for routine maintenance.
The benefit of it tho is that you wont have to deal with the headache of maintenance. You typically start paying more to maintain your car after the life of the lease. But I’m assuming this is already accounted for in the deprecation value
You gotta be careful with ANY dealership. You just have to. They'll try to do whatever they can to get your money because that's the way they are. I always promised myself that I will NEVER put a car for lease, especially how much you are paying for the mileage you've driven the car
Take a look at what happens to lease offers when auto sales are down (like in 07-08) (and 2018-2020). They get downright cheap. But if you take ol Daves advice don't even worry bout what your missing!
Think it entirely depends on the deal you find. Yes agreed some deals can be a rip off but at the same time I’ve found some incredible deals when manufacturers need to shift stock that enable me to drive a brand new car under warranty for less than the cost of buying. You have to be prepared to take the deals though and not hunt for a specific car otherwise it might not work out.
Or..... You can just negotiate the price. Which most buyers are unaware of
Leasing for 5 years is pretty rare, sometimes leasing makes sense, I get the whole leasing interest rates are higher but I can't afford payments on a $30k purchase but I can afford payments to lease a $30k car and I don't keep my cars more than 3-4 years.
Subvented leases are promotions auto makers use to move cars off the lot. Often these leases are contracted at below invoice with additional lease cash as well as a boosted residual percentage. Leases are great for those who understand exactly what and who they are most financially benefitial for. Those who go around saying they are bad for all, are financially ignorant.
Paying cash for a brand new car is waste of money. Better to pay cash for a used car at a cheaper price, Brand new Cars these days are too expensive, Leasing makes since if you don't want to worry about maintenance if it breaks down and don't want to take an auto loan to purchase it.
Can there ever be a case for fleecing a car if the need for the car is short term? Say you live in New York and you have a job assignment in New Jersey for 3 months and otherwise don't need a car? It's probably cheaper than buying and then taking a bath on reselling.
On a lease they call interest the "money factor." If you ask for the money factor and multiply by 2400 you get the APR. For example, if the money factor on a lease is 0.002, you would multiply it by 2,400 to get an equivalent APR of 4.8 percent. If the car dealer uses an interest rate, this can be converted to a money factor by dividing by 2,400.
If the interest rate you derive from the money factor is much higher than the loan APR to buy the same car, it might be worth either considering buying the car outright instead of leasing it, negotiating with the dealership or shopping around for a better lease deal. Better yet: PAY CASH for a car you can afford!
Why 2400? What's the significance of that certain figure?
What about a Nissan Leaf lease where NMAC gives you about 11 grand instead of getting the 7500 tax credit (which I wouldn'tqualofy for without rolling over some 401k from pretax to roth). Then if the battery degraded after 3 years it's not your problem.
I don’t understand when he says to return a lease as if that was something simple to do. To break a lease you need to finish paying as per contract. For that i would imagine it I’d better for the person to wait till the lease is done and then just not lease a car ever again. But returning vehicle would be extremely expensive especially when the person just recently got into it.
Money factor is the disguised interest rate which have different requirements when it comes to disclosing it to customers which many people are unaware of 🤔
congrats on 1k!!
Thank you 👍
Is the same thing applicable if person owns a small business and leases car through it as it is a biz expense and saves tax on it ?
Rent an apartment in my area in ohio: $500/month. Rent a car using a lease in my area in ohio: $800/month. So why not just get some cheap car to live on instead of renting the newer kind that costs so much.
hbarudi which side do you live in Ohio?
@@keshabbhattarai4884 The areas near Michigan.
Used cars are hard to come by without paying an arm and a leg. And repairs are expensive
I know three people who lease a lexus, Range Rover, and Mercedes. They’re all broke.
Leasing isn't financing. Its renting.
No leasing buy a 1-2000 dollar used car to start off until u make more money then when you can go in a dealership and drop cash on whatever car u want 100 percent paid off then that’s what u do drive ur cheap used car until u could buy a better car fully cash no loans at all ever
I learned this the hard way 🙁
One thing he said that isn't true. The interest rate on a lease is called a rental charge, and on average, a luxury dealers rental charge is equivalent to about 3-4 percent
Don’t buy or lease people... walk
wow thanks. That made me see the light. I'll surely walk the 20 miles one way to my job everyday.
Lotus Flower there you go... proud of you 👍🏻
Just watched an ad of Dave Ramsey just to watch Dave Ramsey
If I’m in a current lease is it worth buying it at the end or returning it and finding something I can buy?
Buy a used car outright and have the peace of mind that u r not making monthly payments or potentially getting it reposessed for non payment.
dave takes these kinds of calls all the time
watch?v=jImyTdlyQQE
The interest on a lease is the money factor
When negotiating a deal, is it possible to ask for the truth in lending statement at the table? Or would they want to get you all the way to the finance box to see it?
Fleasing is more like it...stop buying or leasing these overpriced cars folks and put that money in your savings account
Also don't forget - most leasing companies REQUIRE higher levels of liability insurance then banks do. More money there too.
I think it's all about ideals. I know successful people who only lease their cars and only rent their homes. It's about understanding what works for people who need help bettering their finances and so leasing isn't bad for someone who has their finances in order, but to someone who strives to get there it's likely not the best path at the moment towards financial independence.
Well said, I agree 100 percent .
I love cars..when i was a kid I had car posters on my wall, and I have models on my desk as an adult. I'm going to get a new one every 3 years...I just am. My 401k and my house are making me money, but my car is my toy. I put just the 1st payment down at signing on a retired demo and my payments are much lower then if i put the same down on a purchase. And in 3 years I swap it for my latest car crush with out penalty. I've been doing this for years it works for me. I purchased in the past and always had negative equity when I wanted something new. Sure buying a 2 to 3 year old Honda paying it off and driving it forever maybe the smartest thing to do. But what's the point of slaving away my whole life if I'm denying myself the small things I enjoy. I think some people lease just because the payments are lower, but really have no interest in getting a new car in 3 years...thats the problem.
And why cant we demand invoice when were making a down payment?
You either pay a car payment or for car repairs
I always got the impression that Dave knows how to work on cars.
Leasing requires a more savvy consumer than financing is all. There are more factors involved to negotiating the best deal, and it's not right for every car and situation, but leasing comes with perks you just don't get with financing. I'd love to see Dave's source that the average "interest" on a lease is 14% because I don't think that's true at all, but even if it is, what is the average rate for traditional financing? He says it like financing is 5% or less and leasing is 14%. If you have good credit, your lease "interest" is nowhere near 14% trust me.
It's also really hard to take anyone that uses the "renting" argument against leasing seriously. If you're financing that car, do you really think you own it? Try missing some payments and the bank will come tell you who really owns it.
Exactly. A lot of Dave's comment on leasing are based on massive misconceptions, and "renting" is not a bad option.
14% there aren't any lease deals at 14%
I had one at 6%.
@Yussef Saber
That's my point.
Car salemen here.
It includes the depreciation of the vehicle and is variable to a person's credit worthiness
3 year lease: no sales tax, write off taxes payment includes repairs, oil change, new tires new brakes, give it back with old tires and breakes. vs 6 year payment: you gonna pay sales tax+you gonna pay interest rate, oil change, in 6 years you gotta change twice tires and breaks, all repairs is on your wallet,
Pay cash for a new car every three years. No repairs because it’s in warranty, no interest. No tires or brakes. And more flexibility. You can sell it after a year or drive it a million miles. It’s yours.
So if paying for cash makes merchants less money, why does Dave say that sellers are more likely to negotiate lower prices for you when you tell them you’re paying in cash?
I bought my 2015 Camry 3 years certified pre owned. Paid it off in full. Hoping to keep this reliable Toyota for 10 years at least
How much did you get it for?
$16,000 37,500 miles
My question is - Dave said at the end of the lease you either cut them a check for the rest of the money or you give the keys back. So the payments you’re making on the car throughout the five years aren’t going to equate to the entire value of the car + interest when the lease is over?
And also, is leasing basically the same thing as financing? Or is leasing different because you have to give the car back at the end ?
Leasing is pretty much renting with option to buy. If u had listened to Dave carefully all the interest and depreciation is tied into the payments. If u are paying $200 for a lease only $25-$50 of the payment is actually going to the car. The rest is just overhead fees.
Mahalia Ellison The lease is the total of payments to cover a portion of the car, not the full value of the car. And yes, you’re technically paying for financing/borrowing for that portion of the car - but it’s more like renting the car because the automaker is the one borrowing the money to remain owner of the car - and charging you rent. The payments are based on what the leasing company estimates the value will be at the end of the lease (“residual value”). A 3-year lease of payments might cover 50% of the original value of the car. Then you have the option to buy the car at the residual value or walk away. If the street value of the car at the end of the lease is worth far less than the residual value, it doesn’t make sense to buy it. Then again, it probably didn’t make sense to lease the car to begin with because you’re paying for the initial depreciation of the car’s value (just like buying a new car).
It's funny that when Dave is talking about paying off a mortgage early instead of buying stocks, he's focusing on the risk aspect. There is a risk that stock prices may plummet. I get it, that's reasonable. But when he talks about buying a car, he's no longer talking about risks. In his mind, it's just a simple mathematical calculation that leasing a car is more expensive. There are lots of parts in a car that may need expensive repairs. If you lease a car, you know what you're paying for, and the car owner takes the risk. And after 4 years, there are a lot of repairs ahead.
"There are lots of parts in a car that may need expensive repairs. "
No, actually. A new car has a warranty and in either case you get full insurance for new cars. So repairs will not get expensive in the first few years.
That's why this is such a good deal for the dealers: the risk something expensive will break is minimal in the first few years, and they make sure you pay for more than the depreciation. Why do you think they are trying to talk every customer into leasing? Because it's bad for them?
You will be paying on that car for 8 to 9 years on a lease after 3 years is up and you decide to buy it with a auto loan and not outright waste of money
4 more months to go on my lease and I’m out!!!
I hit a deer over the weekend, and leased a car because of my MOTHER 🤦 still currently $11,000 in the hole. Thanks mom.
Life’s to short to drive an Isuzu I love my m340i
I like to call a car MINE. I only will pay cash outright for it and not have any payments to worry about. Leasing is basically long term car rental.
Did he say Ms. Ramsey? lol
If I need a car NOW, and don't have the full money to buy it, leasing with a down payment would be the best option, wouldn't it?
I mean, a used car 10k~15k max.
Here’s what you should do. Find out what the total amount you’re paying for the lease will be over the term. Now go buy/finance a car you can actually afford for that price. Whatever you are ready to lease for .. look elsewhere and buy for that price.
Best thing to lease is a work truck, never gotta worry about break downs.
What about buying a car from Enterprise?
I wouldn't buy a rental car. Many are heavily abused.
Well if everyone could be cash for a car that wasn’t junk that’s be great
Buying a brand new pickup with a 0% loan is actually not bad because they don't lose value fast! Mine was well worth it!
Don I’ll agree to that. Trucks do hold exceptional value
And your monthly payment is what?
I will say it's not bad compared to buying other cars new... BUT my monthly payment on a 5 year loan was between 400-500... I sold it for 80-90% of it's value after 4 years. Just saying that it was the best decision I made accidentally hahahha
Most of the time the interested is added to the price of the car. You're better offer getting preapproval at your bank for a true market rate then finding a dealer that will sell you the car you want for a great price
That explains why cars cost so much these days... they say oh 0% but really it was probably added in before... oh well. Live and learn
Who else is got a" lease a car "AD?
But if you lease it a 3 months for the amount of money that the residual value is for, you are doing good no loss value, you are looking out for the big guy
Years, not months no one wants it after the 3 years, and you can make them pull that out of the lease agreement, and those guys that sell don't make money off of it
It all depends on the dealer you want to lease with (Depending in which car you want lol) My Honda lease was about 6% when calculating everything from MSRP to residual. handed them a check after 3 years of payments. Saved myself 3 years of more interest. It depends on your credit and how much the dealership wants to mess with you. It’s good to call it a fleas, because most dealers want money and don’t care about you at all.
Leasing is under warranty...any problem s boom dealership got ya...if you own it...it's on you!!!!
Come on Dave, huge fan, but 14% APR? Stop it, lol.
I totally disagree with him.... leasing scar is way better and cheaper to do. Just because he says it.... it doesn’t mean that he’s correct
It doesn't mean you are either. Ramsey laid out arguments. Do you have specific counter arguments?
Good luck repairing the car after financing it.
You don't know how to maintain a vehicle?
My car interest rate Is 7.4% on a 34k loan and I absolutely hate it, 14% I’ll be driving it off the cliff and using my gap insurance 😂
Have your friend burn it while your on vacation lol
What many here fail to see is that yes it will or may be more expensive at the end but what ur paying for is not so much the vehicle but the convenience, peace of mind, comfort abilities and those things are actually priceless. Those emotions that he mentioned are what drive people and those feelings sell. When u fly coach as apposed to first class what do u think ur paying fo?r-comfort, peace of mind, luxury... who’s to say leasing is a bad choice for everyone? And for everyone it’s not about the numbers. Leasing It’s not for everyone but for many it works.
His face in the thumbnail looks so sad. Sure, seeing all those people throwing away their money. 💪
Leasing a car in people terms sounds like wanting to be with someone when they're still fun and fresh but never fully commiting because they will get tired of you.
Lol . That’s a great way to put it . !!
Dave doesnt even understand why most people lease.
Easy answer stupid
When it comes to european cars like benz, bmw or audi just lease them. If it's lexus, toyota or other japanese car brands. Buy them
But i want to own the car (after 72 payments).
Too much jargon to explain things. In simple terms. When leasing you pay the depreciation which means throwing away the money. Buying used you lose less money. Ideally its better if you ride a bicycle or walk or ride a motorcycle.
Remember when u lease ur not liable for any major repairs
Buying a car with 5 years warranty if you are worried.
Most newer cars don't require repairs. Don't fall for leasing man.
But you are liable for any wear beyond what's considered "normal wear" by the leaser. Which often turns out to be a lot.
What if you are leasing at 0.99%