Leasing vs Buying a Car: Which is ACTUALLY Cheaper in 2024?
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- เผยแพร่เมื่อ 13 พ.ค. 2024
- Leasing vs Buying a Car: Which is ACTUALLY Cheaper? We discuss this in today's video with a full scenario based on a Rav 4 Hybrid. We also talk about who buying a car is better for, versus who leasing a car is better for. Please note around 6:40 I do say the number "11,595", but that is ME not reading the number correctly, the text on screen is correct (11,195). If you enjoy this type of content, make sure to SubbbbbBSCRIBE!!!
Timestamps:
0:00 - Start Here
0:45 - Leasing
4:02 - Buying
7:06 - Comparing Apples to Apples
8:00 - Returning the Car Scenario
11:15 - When to Lease vs Buy
13:05 - When Buying is Better
13:28 - Who Leasing Is Good For
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Would you rather lease or buy? Drop a comment!
lease because I like the idea of upgrading every so often and having complimentary maintenance. It also opens up more decisions on which car to choose since Im not having to worry about long-term reliability
I leased my 22 Tacoma sr5. I really love the truck plan on saving the money and buying it out. The beauty of leasing is you can try and talk down buy price before you sign the lease. I personally leased because the interest rates are way to high on cars right now. there at like 12-16% in Arizona.
Buying a couple year old used car is the way to go. Anything else and you're throwing money away
@@brocksolomon8953but then you can't look cool to all your friends who don't like you 😎
Jk
@@triple_gem_shining 😂
Adulting is realizing that the 6-figure job you dreamed about can only afford a new, mid-range toyota or honda
lmao seriously
No adulting is realizing that buying a new car is stupid
@@brocksolomon8953 amen
@@brocksolomon8953 No. Adulting is realizing that Toyota dealers are able to sell their Certified Used cars for $10K above the MSRP of a new one just because people like you are always recommending used cars.
@@etvow yeah I never said buy from a dealership.
I think a factor that was missed for all of the lease situations was during the "buy the car after the lease is up" the 21k is shown as basically a cash payment when most people will have to take another loan for the purchase so the interest on that 21k loan will make the total ownership cost even more post lease.
This! Big oversight. Also, “older” cars typically have higher interest rates as risk mitigation for banks. I’m guessing if you just had a chunk of cash (say, $21k) laying around, you would’ve purchased a used car outright in the first place (current used car market aside).
Right on point, I was about to mention this myself.
That's the reason why people don't buy out their cars after their lease. It is very hard to fork over 21k in one payment if you have been driving the car for three years already. And, that's if you have the money for it.
Lease is just lease. Three years and then move on to the new car. You will always be driving the newest model and won't have to worry a out breakdowns.
Yes, also In most cases you will need to go through a certification inspection, and that means you might have additional costs on top of that
I did the math and doing a lease buy-out this year would mean I spent $12,000 more if I keep my Hyundai Kona. It's just cheaper to lease a newer Kona. I would need to take out another loan -- a used car loan -- if I was to keep my current 2022 Kona, and interest rates are higher for used car loans than new loans.
100%. Glad this was one of the first comments I saw cuz this was totally overlooked.
Best comparison & breakdown I've seen so far. Thank you brotha.
I owned a few junkers and always had surprise maintenance bills and it was less expensive and less stressful to lease a brand-new car and I miss leasing. 😢
I was stupid when I was 24 years young and bought a brand new 2001 Toyota Tundra for $30,000 cash……should have bought used…..I just finished college and deserved it was my reasoning……but I guess the good part is I still have it 22 years later and it runs just fine……
If you have driven that Tundra for 22 years, paying $30K when you bought it was smart.
Lucky, I had a 2000 Tundra I paid cash for and it developed a number of expensive problems after 10 years. Traded it for a small Honda, far cheaper to drive.
I bought a 2001 tundra new, it was an advertised special base model about $21,000. Still have it 23 years later.
No that wasn't dumb because you kept that vehicle for many years and got to experience buying a brand new car. I don't think it's a waste buying a new car if you plan on keeping it for a long time. You certainly have gotten yr monies worth.
For cash.. wow
One small detail that might be worth highlighting the next time is that most people will have to finance the residual value at the end of the lease in some way, as they don't have $20k+ laying around. That would add interest to the lease cost to own.
That's what I was thinking. Later in the video, he says that paying in full at the end of the lease is the general expectation. That doesn't make sense for the dealer or for the buyer. Whether you pay from your wallet or a bank gives you a loan, money is money, and the dealer will probably be happy to take it 😶
You don't have to finance anything - you just trade in the car and get a new lease
@@hannahtate923lmao wrong! When you lease cars, you pay a money factor (a lease interest rate). Your comment is mind boggling.
@2004cyrus uhhh, I was responding to the specific comment above. I know you pay an interest rate to lease. The comment was that you have to finance the residual amount of a lease at lease end and that most people don't have 20k lying around. And you don't need to. You can just turn one leased car in and get a new lease. You don't need to buy out the car at lease end. In fact, we even sold a leased car back to the dealer 2.5 years ago - as in, they gave us money to give back a leased car that we didn't actually own, and we didn't have to buy it first. They just gave us the money.
In summary, you DO NOT have to buy out a leased car at lease end. You DO NOT have to pay the residual value. And you DO NOT have to finance the residual value if you don't have the money at lease end. You can simply walk away or start a new lease instead.
@@hannahtate923 correct. I’m in the car industry- my family owns a bunch of franchise dealers in Florida, Texas, Missouri and a few other places. That’s the only reason I mentioned the money factor. Congrats on getting a dealer to give you money for nothing in return. That’s highly unusual and they won’t be in business for long,
To each his/her own,different situations for different people.Appreciate the education 🙏🏼👍🏼
That is the most intelligent video that tackles the question of buy vs lease. Thank you.
I work in a tech job, most of us drive old beaters, and it makes me proud. One guy even has a late 1990’s Civic and I’m slightly jealous, in a competitively frugal way. A paid off car is the only car I’ll ever own, I learned that after the payments were done on my first car loan.
My car is paid off but I need to trade in within 5 years timeframe, otherwise I’m sure the repair cost will be high
@jackz4149 it won't u less you can fix your own car or if you have a honest mechanic. This will still save you alot vs paying monthly car pmts. Dealership mechanics rip you off
@@wjm3018That's true that they rip you off but some of that is reliability cost because finding a good mechanic otherwise is like thrift shopping.
Why?
I love these comparison videos. Seeing the numbers really gives the proper perspective for the big picture. I want to drive my car for 30 years, that may not be realistic but that's what I'm shooting for.
I’m into year 23 for my Toyota Tundra (if I was doing this today it would be a 4Runner, check CR reliability survey) Buy a quality vehicle and take good care of it.
Another pro for leasing: if you’re on a work assignment in a different town for a set period of time, it could make it easier when your assignment ends to simply return the car rather than find a buyer. Oddly specific, but pretty common in certain industries. Great video as always!
military!
You could probably just sell it back to the dealer and still break better
that was one of the best videos that clarify which one is more reasonable . thanks Humphery
Glad it was helpful!
Great video Humphrey. Very informative. One thing that you didn't mention about returning a leased vehicle after the term limit beside mileage, was damage. In the 'small print' of all lease agreements is damages will reduce the value. The value placed on a returned lease, is that it has to be in same condition the vehicle began, with regular wear and tear. Every nick, dent, scratch, bruise, bang will be reduce (by percentage) the value. This means that there could be serious additional payments for the damages. Even windshield and tires. And trying to stay within the milage limitations means you may have to park the car for months before the term ends, so you don't get charges the expensive milage charges. I've seen it as high as 23 or 25 cents per mile.
Thanks for the information. Well done.
super insightful, thanksfor the tips!
This was so helpful thank you so much
So far the best video on leasing vs financing a vehicle but i still think there are several important things to keep in mind to be able to determine the true cost for each one. What is the average number of years a person keeps their financed vehicle, how many cars on average do people finance in their lifetime, average maintenance costs for total cars owned in a lifetime, and this doesnt even account for car crashes or how safe cars are after 10 or 20 years.
Awesome video, learned a lot. Thank you!!
Looking forward to the series.
Extremely helpful. New subbie 😊
Fireeee 🔥🔥🔥
I beat all of these options by buying a used car that’s around 3 yrs old (time frame when depreciation is the steepest), paying cash (with a max limit of $35k) and keeping them for around 10 years depending on maintenance and issues.
I try to buy Honda/Toyota since they are always on top of the reliability list - meaning $avings in maintenance costs over the years, and they usually last 10-15 yrs!
I have a Honda, Toyota and a Ford econoline... buy used, pay cash, take your time inspecting the car and stay current with maintenance.
This is the correct answer
Except 3 year old Toyotas are only a few thousand cheaper than brand new. The used market is horrible right now.
@@jrroelle Just wait a bit… I bought my 3 yr old Lexus (used) in 2021 for $28k… new, it was around $54k
But neither of those vehicles offer joy of a drive. They are boring boxes on the wheels. With outdated technology and subpar driving characteristics.
Car buyer here, typically buy Toyota/Lexus and keep them for over 10years (current Prius is at 13 years). Usually pay off vehicle pretty fast, usually cash to avoid credit interest payments. Its really nice not having any car payment for years. I think leasing also is good for BEVs since the EV market is fairly young and battery tech is advancing year-to-year.
Literally any modern car with proper maintance will last 10 plus years even chevy sonic.
This was probably the best explanation of lease vs buy. Thanks.
I’ve learned so much from you and would never unsubscribe! I appreciate your videos so much and when people ask me about financial topics I send them to your channel.
I'm so glad!
Amazing video. Thank you for this
Fantastic video!
In some states, such as Missouri, you pay property tax every year on a vehicle you own. This tax goes down slightly each year, but you could be paying out thousands of dollars in annual taxes on the vehicle you purchased. In comparison, many leases cover this property tax over the term of the lease. Another thought, don’t put any money down regardless of lease or purchase. Instead take that down payment money and have it work for you in a way that it (the money) will compound and provide you the cash needed to buy out the lease at end of term, or to make your monthly payment, etc. I purchase rental properties that yield monthly cash flow and that cash makes the monthly payment on the vehicle while also providing me with a tangible, appreciating asset.
Very Helpful, thanks!
Very good comparison 👏
Great video, one minor correction:
You can indeed trade in a lease or transfer it to someone else,
Most dealers will pay off the lease and you only owe the difference amount between your remaining residual and current value. If you lease a car like an M3 or a 911 or a Civic, you can probably walk away from a lease without owing anything
I’d also say that, for example me, I have calculated a monthly allowance for car payment that I am okay with. I don’t care if I pay for a car. I like getting new cars every 3 years and everytime I need to look for a new car I take my current lease and get a quote from car max. 5 cars in a row have had at least 4-7k offered over residual value left in the lease. I take that quote to dealership and say I’ll take a new car from you if you match car max offer. I’ve never had to put down more money in 15 years for a new car.
Just my experience.
Excellent video🎉 👏Actually we r in a confusion whether to lease or buy a car...... Your explanation gave a perfect clarification for us... Thanks a lot...
So what did you decide? Buy or lease?
Helpful ❤
Very good review with data
I like this guy, very informative videos
For international workers in USA, leasing a car makes more sense if they do not have the visibility of their employment. This was the case with me. In 2019 Nov (just before covid) I ended up leasing a car, and at the end of 3 year lease, I had the assurance of my employment and ended up buying my car. At that time, residual value of my car was 16k but the used car value in market was more than what a new year was in 2019.
Pretty useful video 👍🏻
Great video Humphrey! In my opinion, if the asset appreciates, one buys; but if it depreciates, one rents the asset. Perhaps, another way would be owning a car with classic plates, which it does appreciates over time. Now, its maintenance cost could increase over time too. The important thing is to have options, right!
There is one major financial part you missed with the current state of EV/PHEV/Hybrid tax incentives. Most no longer qualify for the incentives when purchasing but do when leasing. This can add a huge savings to leasing. Could even be a better incentive to lease then purchase once lease is over or simply lease and move on and let someone else deal with the batteries a few years later.
The $7500 doesn’t go to the customer it goes to the company leasing out the vehicle
This is a great video. I still would rather lease kuz i like to change cars alot and if theres ever an accident i dnt have to worry about taking the hit on value. Plus i like the lower payments.
Well done! You walked through every possible scenario, I appreciate it! 🎉
This was supppper helpful and I know where I stand in this market❤
Thank you for the video, really enjoyed it...Can you make a video that talks about if it's better to drive a car until the wheels fall off, maybe 15-20 years, or sell the car at some point before it stops working, what would save more money in the long run ?
was considering leasing a model y. however, the used car market has somewhat promising resell value. therefore, i'm gonna buy. thanks for proofing my point. great math course!
Great video and explanation
Glad you liked it!
The money factor on a lease(which can be converted to interest rate) vs. interest rate on a purchase is the most important variable. Sometimes the lease money factor is cheaper than the interest rate which makes lease total cost of ownership cheaper.
There are actually three important variables on a lease, each can be an issue.
Firstly there is the price paid. If you do not negotiate the price (capitalized cost on a lease) you will make a bad lease. To the dealer a lease is a sale, a sale to the leading company at the price you negotiate.
Secondly there is the money factor. If yo do not ensure the money factor (multiply the money factor by 2,400 to get the interest rate) is applicable to your credit profile you will make a bad lease. Always demand the F&I manager reveal the actual money factor the leasing company approved.
Thirdly there is the residual value. This is set by the leasing company and is not negotiable. The RV will vary by the length of the lease and the mileage allowed.
Also there is the issue of the acquisition fee. This is a fee from the leasing company and is not negotiable but may be included in the capitalized cost (the amount borrowed).
Purchasing is always financially better, A lower monthly payment does not mean financially smarter, actually the opposite!
I lease a 2019 Rav4 XLE AWD and my lease 370 a month for 3 years with ZERO down. Toward the end of the lease I called toyota and extended the lease another year and paid 400 a month for another year. My buyout was $16900 and financed it til I could find a car I wanted without time constraints. Traded it in for $24000 and received a check for over 6k (equity) for a down payment on my new car. Sticker on my Rav4 was 32k back then and I am not really going to be a bean counter on this, but I basically paid 200 a month for fairly well equiped car and my only maintenance was a couple oil changes (Toyota has 25k free maintenance). The point is there is a sweet spot to lease a car with high resale and keep til you get the most bang for your buck before tires and brakes are needed.
This is basically EXACTLY what I'm potentially looking to do with a new 2024 Rav4 XLE Hybrid in the next month or so, so this was a super helpful comment! Thanks for sharing!
@@DannycristofaroSo are you going to lease then buy it at end?
I can see this situation working out the way it did because of where the market is. But it isn’t necessarily going to remain the same, so still no guarantees. Glad it worked out for you tho! 🙌🏾
From the ages of 16 to 50 I always bought used cars that were about 5 years. After dealing with leaking oil in the driveway. One vehicle needed a total transmission overhaul and it never ran the same way after a 5k repair.
I have never believed repair shops are very honest. They can always find something additional to miraculously find wrong.
At age 50 I decided to lease. ALL of those problems above have been solved 😂😂. I no longer need to keep a car repair maintenance account. Bumper to bumper warranty 36,000 miles. I get the lease damage waiver which few people seem to know about. I get a new vehicle every 3 years.
My second lease ends this year and I could buy out my Toyota Corolla for 16k. I hold an 812 credit score and have all the access I need to zero interest loans. It would take me 10 months to pay it off.
But I'm going to go back to leasing my third car because quite frankly it's a luxury I'm willing to pay for.
The peace of mind is unreal.
Quite happy I leased my GTI 2021 at 1.9%😂 There's also a 10k$CAD difference in market resale value and buy back cost which I'm looking forward to in the next few months
I’ve leased two cars and bought 2. Leasing is way better if you don’t drive a ton. The cars i have owned have caused me so many headaches. Aside from the price you have to remember that when it’s your car it’s your problem Time at the mechanic,missed days of work, cars won’t start before heading to work. It sucks. Leasing is just easier. It’s cheaper, everything is under warranty and if you really like your car after it’s done you can just buy it( but you won’t bc you’re tired of it). Is insurance higher yeah a little bit but good luck not having good insurance coverage. Your 10k policy limit won’t even cover a paint job. If you don’t like to be inconvenienced just lease it.
Thank you for your comment
Awesome comparison and you have covered all aspects. But one thing is unclear whether you have considered the maintenance costs such as fuel, service, tyres, insurance and annual registration in buying the car scenario. I assume all the above are covered in leasing scenario.
Thank you for this, I am a first time car buyer and didn't know the true comparison between buying vs. leasing... but this cleared it up for me, the numbers don't lie and I am going to be buying a car, not leasing. Thank you!
He missed a lot of info comparing. Please check other sources.
He presented a very shallow surface level analysis. In reality leasing is often cheaper depending on OEM incentives.
Right now many OEMs are offering leases with roughly 2.5% APR loans, where do you get that number financing a car?
Residual values are not set in stone like he's presenting either. OEMs often subvent the lease and set them too high, which reduces the cost of leasing even further.
And then there are the EV tax incentives available to leasing but not buying.
He's missed a ton of stuff.
Thanks for the video. If you could do one for the Australian scenario, it would be very helpful for Ozzie's.
I can't thank you enough for the quality content! Happy holidays!
Same to you!
I agree. Very good video. I’d probably buy.
Thanks for going over the math in such a precise and crisp way. However, I felt like there's another expense to be considered that there's generally a higher auto insurance you need to pay on a leased vehicle since most leasing companies require you to purchase a comprehensive auto insurance policy.
That is not true in every state. Ohio only requires state minimums. Do not fall for that insurance scam.
well explained
In my case I leased for 3 years and when the lease was ending I purchased the car the remaining balance for $14,500 . I requested a 401K loan for 16K, and I paid back my loan and with interest in 2 years. I requested 16 K to add sales taxes and I received the title form Toyota financial a week later.
The wrench in this is EVs where the dealer will provide you with the $7500 tax credit toward the value of the leased amount but who don’t yet qualify for the federal tax credit when you buy.
Thanks!
Naive question here, but the ~$38K total cost to own when leasing a car and buying out right at the end of the lease assumes that you pay cash for the residual value of the car right? If you have to finance the residual value after your lease matures, then the cost would be higher still.
Thank you your video is SPOT ON . I have a reliable 2013 Nissan Altima. I had a 2016 Porsche Cayenne that was recently totaled 😢. I am considering a Mazda CX90. I really want to lease a Range Rover Velar. They are really cheap used like 1/2 price after 4 years but they are known for problems and expense. A 3 year lease without having to worry about maintenance and then returning it works for me just for the experience. The Mazda will always be there and in my price range.
Great video, thanks! Would like to know what type of SUV has a high residual value (>65%)that is in this market now? I would like a hybrid or electric. I'm looking to buy, but would lease too. I leased my 2018 subaru crosstrek and definitely made money after all the calculations.
Constructive criticism: you're assuming the customer has 21,088 cash to buy the residual, you should include the finance costs with a 21k loan (also would there be more fees when purchasing it, for the additional transaction?).
Also: you could compare selling the "buy car" at 3 years of the 5 year term. U just need to figure in the payoff of the loan amount against the selling price.
I mean he is correct, I’m paying $21,000 to buy my current Mazda CX-5 lease when it’s up in May. My lease payment has only been $477/month and so I saved the cash to buy this thing at the end. Of course I’ll sell it on the private market after that to make myself $6k or so for myself since I have a super clean and low mileage vehicle here to bring to market.
Very interesting and well done, but in limiting the comparison to 3 years you miss the savings that comes with each year of ownership. Most buyers don't sell and buy another every 3 years, and in your example if the car is paid for you're only out maintenance and the additional depreciation. Each additional year reduces the average cost per year, whereas the leasing individual starts all over with another three years of the same costs.
Buying outright is best. Forget Leasing unless you have the means to write off on taxes. Overall, Mr. Yang did a good job covering the Pros and Cons.
Thank you for this analysis. I have been thinking about leasing because I would like a new car but want to wait to see what the electric and hybrid options will be available 3 years from now versus what is available now. Seems to me that market is still figuring itself out. If I buy an internal combustion engine now what will be its residual value in 3 years compared to an electric vehicle or hybrid. Great information in video!
Great video. You're right that each deal has to be examined. Leasing Mazdas seems to be a better deal than Toyotas, perhaps.
What do you mean about leasing Mazdas?
The best thing you can do is to buy a 1 or 2 year old used Tacoma, 4Runner, or Tundra (particularly 4x4 double cab 'offroad' or 'pro' model), then sell it just before the powertrain warranty expires at approximately 60k miles or 5 years for pretty close to what you paid for it. The second best is to do the same thing but with a brand new version of one of those 3 vehicles if you can't find a good deal on used, or just prefer brand new. By the time you sell it, it'll average out to less than $100/month lost. But, if you wait too long to sell, you risk running into issues such as the clearcoat showing obvious oxidation, lowering its resale value a couple grand.
Can confirm. Got my 4Runner Xmas of 2018 and it’s held 100% of the pre-interest value.
Great video Humphrey! I’ve been driving the same vehicle for about 7 years and i was just thinking about “investing” in some new wheels.
I make pretty good money and I’m open to a lot of options but mentally I’m still someone who thinks of cars to get me from point A to point B.
Maybe one day I’ll get my dream car but for now I want to get something reasonable, hybrid and will last me 5/10 years. So this video has definitely help explain the price differences over a set period.
Thanks Hump!
bought my 2013 civic about 8 years ago for 14k. paid it off in 3 years. havent had a car payment since. the car is still worth 14k lol. this is probably the main reason why rich people/people that are good with money say to keep your first car.
my maintenance cost is low. basically just oil changes, buying a set of winter tires and swapping them. can't remember if i had to change my brakes/rotors. really nothing to worry about.
buy the car if you can take care of your things lol.
Rich people don't drive 2013 Civics
I’m currently in a lease, but I’m not over the mileage limits rather I’m well under the mileage limits and I know that has some value to it too but I was hoping you would’ve covered that portion on the leasing side of things
that is true, i just thought it was too many variables to control for
Hi @humphrey.
In case of lease buy out amount of $21,088, are we considering financing interest and fees as well? I'm assuming most people would refinance it if they chose to buy out the car after the lease ends.
There are diffrent opinions because there are diffrent needs. Two main things to consider is how long you would like to own that car and current intrests. How much car depreciate make difference too so in case of Toyota leasing had better offer than eg. some Jeep.
One big reason why I lease is opportunity costs. I'd rather pay lower monthly payments for a better car, and not tie up my capital in a loan. Id make more money in the long run investing the difference.
Good video thanks for your content
@humphrey, in your assessment, aren't you missing the fact that you need to pay taxes (assuming your state taxes car purchases) a second time when you lease a car and then purchase it at the end of the lease?
In Spain(i may be wrong) i think the monthly lease payment includes a set number maintenance amnually and insurance
This is exactly what I needed to see to workout out my mental calculations! Financing for 3 years and potentially selling will definitely be my next move 🙏💯
That may not be wise. For one reason, the acquisition fee which is usually around $800 or so. You do not pay this on a purchase.
If you are sure you want to lease and then purchase at the end of the lease you might be better served to purchase the vehicle and not pay the acquisition fee.
@@jerrylundegaard2592
You need to go back and Re-read what he said! He said nothing about leasing!
@@allaboutcars4835 Ah the title is "leasing vs buying, which is cheaper."
@@jerrylundegaard2592
Ah the individual that you were responding to is saying that he will finance (BUY) the car, then try to SELL it after 3 years.
He is not talking about leasing the car.
hugely helpful, thanks!!
as you mentioned the monthly lease payments includes the taxes, similarly we should account for the sales tax while owning the new/lease vehicle
What you didn’t figure in, if buying it at the end and trying to resell, is that you also typically have to pay the sales tax on it. In my state it’s 7% on that 21k, so, an additional $1400. Then, you still have to try to sell it and deal with the whole scam artist market of people trying to scam you if selling privately. It’s really hard to sell a car privately when they are over 30- 40k. Most of these people need loans etc etc. I’ve been fortunate to have higher end sports cars over the last 12 years. Trying to sell them is near impossible when asking over 200k for a car, and after paying 15k in sales tax. Kind of eats into your margin. Easier to trade them in. They are depreciating assets unfortunately
For a more complete comparison, couls you also add the scenario thqt leasing then buy the lease after it ends? How does it work in the end for like 10 to 15 yr ownership?
Also is there any difference between different car types right now? And what if interest rate changes? Would you be able to generate another set of data under that condition?
I just had my motor replaced on a 2006 CRV with a used JDM motor. My Total repair was way less than a monthly payment and a car note. I will sacrifice the looks that come with a new/certified used vehicle for financial freedom that way I can use that extra saved money for more important things that matter to me then a car note.
Very good points you covered there.
Thank you for the video. I’ve seen videos saying it’s not a good idea to put a large down payment to further lower the monthly payments on a lease. It’s even possible to not put any down payment but it will just roll into a higher monthly payment. What’s your opinion on down payments on a lease?
I'm 65 with a 2005 and 2008 car and truck. The costs for average repairs is astronomical on modern vehicles. Parts, labor, and even finding a mechanic qualified to fix a new car are my reasons for leasing at this time in my life. Just one major repair can erase all the equity in an older vehicle. So, if I put down enough money with a trade in, I can lease a 2024 $30,000 car for $250 per month with an insurance cost only $200 more per year. The lease terms and insurance covers nearly every service and repair cost. At my age, I no longer enjoy working on my cars and the new vehicles are too complex for me to fix.
Thanks for a well thought out video. I had always heard that leasing is not the way for an individual to go bc you end up paying more. Here's the problem today, for a lot of people. They can't afford to finance bc the rates are ridiculously high which means the monthly payments are too high. The $551 and $866 amounts you mentioned for financing like leasing, also have to have added on the monthly insurance costs, maintenance costs, and gas costs which make it far more expensive than the stated monthly costs. I am looking at leasing bc of the crazy high interest rates. I have seen 6.99 and 7.99.
A monthly payment of under $ 400 allows me to put aside money for a rainy day or to pay the car off at the end of the lease. Yes I am going to be paying more, but I keep my cars on average 14.3 years. Also, if the car is a lemon, I'm not stuck bc I'm not buying it. Right now I'm waiting for at least one year before I buy, bc I want a larger down payment AND I'm hoping rates go down. A rate drop of just 2% can make a huge difference in the monthly payment whether you are leasing or buying. Any comments welcome.
P.S., Over the pst 43 years I have only owned 3 cars. I'm allergic to monthly payments, that's why I choose cars that give me a joy kick every time I walk up to them. : )
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I think its simple, if you have the credit you should buy it because even if you dont like the car enough you can sell it. If you lease it then you will be throwing your money on something you dont own. Besides, you can modify your own car with different wheels, window tint, performance mods... on a lease car you can barely wash it and be careful, if you scratch it you will lose more money than purchasing it
true true
Not everyone wants to mod their car, and actually leasing tends to require better credit than financing. Maybe someone only wants to have a car under warranty, and will upgrade every 3-4 years. You can do simple calculations of the cost of ownership for different vehicles and compare them with each other to find which vehicles make more sense either leasing or financing. for example it's probably a bad decision to lease a toyota corolla but it makes makes sense to lease a BMW 5 series
@@sai-pc5fl youre right about the brand, but im one of those that do not like to pay for things you dont own. My wife is leasing a corolla and she uses it daily. She already passed the millage limit and now we gotta pay the extra fee, which is basically the same monthly payments as purchasing the car. The only difference is that she doesnt own the car, so at the end of the contract she either purchase the car for a higher cost than purchase it on the first place or let it go.
What if I leased it and the value still holds at what I leased it for?
I'm thinking of going to get a jeep 4xe. Am i right to just lease it to try it out, too? Because I've seen some issues like leakage or under the machine problems which is too technical & i don't want to pay much for maintenance 😅
Another advantage to leasing is if your car is in an accident and the value has plummeted you can walk away at the end financially free and let the car maker take the depreciation hit.
Only if you have gap insurance
That is because GAP insurance is included in all leases to protect the leasing company.
In most cases its probably better to buy but for my personal case I think it wouldve been better to lease a car rather than buy. I had less than $1000 for a down payment, about to graduate college but got a job across the country and needed a car desperately to get there and work. Now im stuck overpaying for a car already worth half of the car not im stuck in and the monthly payments are killing me. So if i couldve leased a car for less than $300 a month I would be in such a better situation and would have something to put down on a car with better credit and a good bank (i also didnt have a bank to loan money at the time, only had chime)
Thank you for the video. I didn't quite get from where the value of $14,184 appeared. I understand that its probably the difference between MSRP and residual value plus interest, taxes and fees. But, I guess, for the purpose of the video it's important to understand what were the values of taxes, fees and interest used. Or did I miss something?
Can you do a comparison of buy new vs used for a low depreciating car?
Just installed a new clutch on my only car Nissan Frontier (stick shift) I purchased a brand new in 2002 for $11 200 .meanwhile paid off my mortgage in 7 years
Given that both new and used car prices are expected to fall in 2024 and possibly beyond, how does that effect the lease vs buy decision?
I have a lease and will turning it in, in 2 months. For me, I'm in the Contra Costa County, in California and have a car tax of 10.25% of purchasing value (residual). I don't drive much, so I have a great resale value. If I trade my car in at the dealership, I get dealer trade-in value minus residual ($9,000), and apply it on my next car. I could buy out right but I have to pay the sales tax, which is tax times residual value, right now that would be $2,200 (tax). I know I have options.
Or buy used and affordable, in the sub 8k range. Yes, they are out there. Full cash purchase from private seller. No finance charges. You can decide if you want to keep collision and comprehensive insurance on it depending on age and condition of vehicle, and where you live. I have a 2001 US made truck I bought used. Paid cash. Spent probably a few thousand on some repairs to A/C and other minor things. Been rock solid reliable since. One oil change per year. I drive less than 8k miles per year currently. It is not a pretty vehicle, but it is damn cheap to own. Keeping up with the appearances is not any concern for me. No debt is important. Truck has almost 300k miles on it now with the original automatic transmission. I change the transmission fluid every few years. Eventually the trans will need replacement. Probably another 3k for a transmission swap. It's a very common unit and easily available. Still ahead of the game.