BUYING VS LEASING A CAR 🚗 Should You Buy Or Lease A Car?#Best Education Page #Online Earning

so here's a common problem young people

are faced with actually it could be

anybody at any age but specifically I

think I'm during this towards young

people simply because that's mostly oh

by audiences here but the question is

should you buy a car or should you lease

a car so buying versus leasing a car has

its own advantages and disadvantages

much like renting versus buying a house

now I personally never leased a car on

all the cars I've had before I just

bought them outright with cash they were

kind of cheap cars right now I have two

cars because I just felt like hey why

not maintain two cars sounds like a fun

idea sign me up

it's kind of a crazy waste of money but

I have my I got a Subaru WRX that I

drive in the summer for fun that I also

have like an old Honda CRV that I Drive

in the winter when I don't want to get

salt all over my nicer car for me I

guess it makes sense but it was kind of

a headache when I had both car is need

work at the same exact time and I was

like wow this is great

I get to maintain two vehicles at once

what a great idea so I don't know if it

makes financial sense at the end of the

day but that's just my own experience

with it I've never personally leased a

car the main reason that I wouldn't is

because I Drive like thirty thirty

thousand plus miles a year at least just

to get to work so there's no way

leasing would ever make sense for me but

this is going to be pretty much

everything about leasing versus buying a

car and it's by the end of this video

you don't know which to do then I'm

going to be surprised because there's a

lot of information here so anyways what

does it mean to lease a car well

basically you get a new car every few

years you don't have to deal with the

hassle of selling it or trading the car

in and then when you're buying a car

each payment builds equity once the car

is paid off you own it free and clear

and then you need to sell the car

yourself trade it in or in some cases

donate it if there's really not a lot of

value to it so what it comes down

between and for most people is what

makes more financial sense and I have a

lot of information I didn't want to like

write it on the board because sometimes

I spend half the

staring at the board and it's not very

engaging so I just draw these down here

and I'm going to read these off the

paper so hopefully you guys don't mind

so what makes more financial sense the

first factor to consider is your cash

flow basically you pay for the

depreciation of a car in a lease and you

build no equity lease payments are

typically lower than loan payments when

you actually buy the car and then if you

need more cash each month leasing will

save you short-term cash so we're going

to talk about this example in a second

but this is just the one that I wrote up

here if you bought the car your payment

would be maybe 329 a month this is for a

$20,000 car so let's say your payment

for a five year loan 3:29 a month versus

leasing it $200 a month so you have an

extra 129 a month so if you need cash

each month leasing might make more sense

for you the second factor to consider is

your overall savings mostly famous had a

low down payment or some cases they have

no down payment and the down payment on

a loan is typically more upfront cost so

in our example here when you're buying

that $20,000 car your down payment is

$3,000 versus your down payment on that

lease is $2,000 now I'm sure if you

wanted to do a zero down beasts you

would just factor that $2,000 into the

actual cost of the lease and your

monthly payments might go up but if

you're somebody who either has nothing

and paintings or if you have not a whole

lot of money and you're out looking to

burn through all of your savings leasing

might make more sense because it takes

less of an impact on the cash that you

have saved up number three this is a big

one you need to consider your mileage

how much are you actually driving your

car there are different leases out there

for a car you could have like an ultra

low mileage lease you could have low

mileage basis and I'm there's like high

mileage leases as well I'm not sure how

high they go because like I said

personally guys I've never looked into

leasing because I'm sure the cost of

leasing the car and having 30,000 miles

a year I don't think that would ever

make sense for me financially if you go

over your mileage during the term of the

lease you pay more money per mile on

your over the seat total austrack what I

was saying if you go over your mileage

during the term of the lease you pay

more

per mile you are over at the end of the

term so I mentioned that over here in

this example so basically let's say you

had a mileage penalty of twenty ten per

mile which is not unheard of that's

actually kind of a common price for that

so if you went over ten thousand miles

on your lease that would be an extra

cost of two thousand dollars in penalty

for the mileage so it's definitely

something you need to consider how many

miles are you going to be driving this

car are you expecting to go over with

your mileage the on higher miles on a

car obviously lower the value of it and

that is why you need to pay that extra

fee the extra mileage penalty can be a

significant cost as it is generally paid

in full at the end of your lease so it's

not something that's factored in with

your monthly payment it's not something

you pay yearly in those cases it's at

the end of your lease whatever you're

over multiply that by the price per mile

thereafter and then you just pay that

upfront so you may have to pay a large

upfront cost if you go over on your

lease with mileage if you plan on going

over mileage you want to try to buy the

miles upfront as it may be a lower cost

per mile if you negotiate at the

beginning so that's why you want to make

sure you're following into the correct

lease category of maybe at low mileage

lease or higher mileage lease calculate

your miles in the beginning that way you

can negotiate when you're upfront with

it and not have it go over because it's

generally going to be more expensive to

buy those miles after the fact the

fourth factor to consider is the

condition of your car how well do you

keep your car's if you are prone to

scratches dents have kids or pets you

may need to pay what's called a wear and

tear fee as a result of any damage to

the car so if you're somebody who likes

to take your dog to the park and you're

buying a leather car or your lease I

mean you're leasing a leather car you

got to watch out for your wear and tear

penalty on that car the other thing is

that if you're somebody who's using this

for work let's say you're buying a truck

and you plan on using it as a truck and

loading it up with firewood and all that

and towing with it I don't know leasing

is the best idea because you might end

up having to pay that wear-and-tear

penalty at the end and the wear and tear

feeds can be as much as three extra

lease payments in some cases so it can

be quite expensive

um so number five let's see the fifth

factor to consider

whether you using this car for your

personal use or for business use and

that's because depreciation and taxes on

a car that at least for business are tax

deductible in some cases while interest

on loans on a car purchase for business

are not tax deductible so that's just

something to consider as well obviously

bit less common but it's based on how

much what percentage of the time you're

using that car of your business

versus what percentage you're using it

for personal use number six is the

actual duration of your lease so do you

keep cards for a long time or are you

somebody who's frequently changing cars

maybe you get bored of them or you're

just looking to have brand new cars all

the time

let's because breaking a lease early can

be extremely expensive there going to be

a penalty of up to six months of extra

lease payments to break out of your

lease make sure you're ready to stick to

the term and release when you sign that

lease agreement okay so let's look at an

example here of buying a car this is a

$20,000 car over five years versus

making that same car for five years

one thing I want to point out here I'm

assuming six percent interest a lot of

people are going to say that's really

high but because I'm viewing this toward

younger people you likely don't have as

much as buying history maybe your

credits not as good and six percent

maybe a reasonable interest rate for a

young person I know I've seen interest

rates a lot higher in some cases I have

friends of mine who will have like 15%

interest rates on cars that's insanity I

can't even believe it's legal to charge

people that much in interest but you

know you know that's the unfortunate

reality obviously if you can get a co

borrower on the car that's good because

you can get your interest rate to be a

little bit lower so if you get up maybe

your parents would cosign for you or

grandparents that would help you a lot

with that

anyway let's say you're buying this car

you have a $3,000 down payment on it

$17,000 is lonely for the $20,000 car at

a 6% per year interest rate your payment

over five years will be $329 a month and

your total cost for that car on

including the interest would be 19

thousand seven hundred nineteen dollars

so all in all when you factor in how

much you pay over that five years with

your down payment the total cost for

that twenty thousand dollar car

22700 $19 okay

so five years have gone by your vehicle

has depreciated it's now worth $7,000

however you own the car free and clear

so let's say best-case scenario you sell

that car private party

get your $7000 out of it so that means

that over those five years it costs you

fifteen thousand seven hundred nineteen

dollars to own that car now something to

consider when looking at these two

prices let's say you have the ability to

buy that car outright at the beginning

that car would have only costed $13,000

basically the original value of the car

minus depreciation now let's look at

leasing that same car over five years

now your down payment will likely be

less so let's say at $2,000 down

payments and then most leases are for

three years so if you want to lease a

car for five years you would probably

have that extended lease which is

generally more expensive because it's a

shorter term

so your first lease is $200 a month for

that first three-year lease and then you

sign an extended meets for another two

years at 250 a month now this is

assuming there are no mileage penalty

and there's no wear and tear on the car

in that case your total cost for this

car fifteen thousand two hundred dollars

obviously your total equity is zero

because you have not put any equity into

the car because you're leasing it so

your total cost is fifteen thousand two

hundred dollars so in a perfect world

where you're not paying wear and tear

where there's no extra mileage on that

car in this case for somebody leasing

might be less expensive but let's say

you're somebody who put on some extra

miles on that car so let's say you have

a mileage penalty and you're also paying

wear-and-tear which it's hard to attend

in a car and in most cases unless you

keep your car pristine you're probably

going to pay something as far as where

intere goes so let's say you went over

ten thousand miles I know that may sound

like a lot guys but that's only two

thousand miles per year over five years

so that might even be a lowball but

let's say it's ten thousand miles over

at 20 cents a mile that means you're

paying two thousand dollars when you

turn that car back in on top of that

they're going to charge you basically

three months of lease payments for the

therapy that's $750 maybe you put your

dog in the backseat you scratched up the

leather now you're paying wear and tear

so now all of a sudden that car cost you

17,000 950 so obviously if you're paying

any mileage penalties or wear and tear

all the sudden leasing became a lot more

expensive than buying the car especially

if you have the option to pay it in full

so it really comes down to how well you

maintain your cars and how many miles

you're going to be driving that car okay

so what are the potential problems with

leasing a car there's three main ones

that I have here the first one is that

if you pay a lot of money up front for

the lease

basically what you're doing is pre

paying for a lower monthly payments and

the car is either totaled or stolen the

insurance company would reimburse the

leasing company and you likely would not

be refunded for the down payment on the

lease which kind of sucks guys so let's

say you put $2,000 down on that car in

that example before all right and let's

say the third day you have that car here

in some kind of catastrophic accident

and your total vehicle or that car is

stolen it's not very likely that you

would ever see that $2,000 again because

first of all you have that awful lot

depreciation so that is the basically

the leasing company would likely not

even get the full value for the car and

that actually ties ins the number to

where you might also owe money on the

car to that leasing company but any of

those pre payments on that car that you

made that down payment you would likely

you never see any of that money back so

that's one reason why some people decide

to just do a lease with $0 down on it

for that reason right there number two

is similar to number one if you total

the car and the insurance company pays

less than what the customer is obligated

to pay under the terms of the lease the

customer pays the difference basically

yeah the also a depreciation as soon as

you drive that car off the lot the value

Falls substantially that is why people

have gap insurance which covers the

difference between the depreciated value

of the car and what you actually pay for

it so if you're a not-so-perfect driver

or you're really paranoid about that

you definitely want to consider having

gap insurance on that car if you don't

have gap insurance you're going to

the bill for that difference in most

cases number three if you lease beyond

the warranty it is at your own risk and

you are responsible for maintenance so I

know most cars that I've seen have like

a three year 36,000 mile warranty and

like like I said in our example here

let's say you wanted to lease that car

for five years for whatever reason it

basically passed those three years or

those 36,000 miles if that engine were

to just completely fail on you and you

had to replace an engine or anything

really bad went wrong with it it is your

responsibility and you're driving that

car at your own risk now I know

obviously even if you bought that car it

would still be your responsibility to

repair it but it's just something to

consider that even though you don't own

that car at a certain point you may be

responsible for the maintenance of that

car so what is the best-case scenario

and obviously this doesn't apply to

everyone because not everyone has widely

Capp around but let's say you

have enough money and you want to know

what is the best possible scenario well

even the best scenario is not that great

because there's nobody ever makes money

on a car unless you buy some classic car

keep it pristine and it goes up in value

but I'm talking about your daily driver

nobody's going to make any money under a

daily driver but what's the best-case

scenario to lose the least amount of

money possible that would be to buy a

pre-owned car with cash to avoid that

off the lot depreciation so maybe you

buy a car that's about one or two years

old probably two years is better I think

that's one there's the most vehicle

depreciation is the first two years and

then you're not having to pay any

interest on the loan because you bought

the car in cash so that's your best-case

scenario anyways basically who should

lease a car who should buy a car all

right who should lease first of all

business owners who want to take

advantage of the tax deductions eight

plus drivers who are not worried about

getting into an accident clean drivers

so people who are very meticulous with

their cars you're not gonna have to

worry about paying that wear-and-tear

fee anybody driving under ten thousand

miles might save money with a lease

anybody who wants the luxury of drying a

new car or a relatively new car because

every three

you can just get a new lease get a brand

new car trade your old one back in some

people enjoy that luxury or people who

have really bad credit so let's say your

only option if you're buying a car you

can't get anybody to co-sign for you

let's say somebody's trying to get you

to pay 15% interest on a car payment you

might be in a scenario where you were

forced to lease because you should never

pay that much for an interest rate

that's insanity and when you're leasing

the car you might be able to build

credit in the meantime and after that

lease is up maybe then you can buy a car

and your credit will be better due to

your payment history but if your credit

is just awful you might want to leave

simply to save yourself some money so

who should buy a car that would be

anybody who is driving basically for

personal use got you because you can't

deduct any personal mileage from your

taxes people who are using the car for

work so if you want to use the truck and

load it up with wood and toast up with

it and you're going to be hard on your

car you should probably buy the car

because you don't want to pay the wear

and tear fees on it any not-so-perfect

drivers so maybe you get scratches and

dents maybe you're hard on your vehicles

again that's because the wear and tear

feeds you're going to pay anyone with

pets or kids again if they're going to

destroy the interior during your hair

all over scratch up the seats if you

have kids spilling stuff you probably

don't want to lease that car you

probably want to buy it anyone who

drives over 10,000 mileage be bought

10,000 miles because at that point

you're probably in a higher mileage

lease and at that point you're probably

paying more than you would if you bought

the car and sold it for the depreciated

value anyone with unpredictable miles

this is important let's say you're in a

situation where you don't have a job or

maybe you're in between jobs or you're

going to be changing jobs and all of a

sudden you're going to have to drive 40

minutes instead of 20 now all of a

sudden you might be going way over your

miles and you'll have no choice because

you've already signed that lease and all

you can do is pay the extra miles at the

end so if you have unpredictable miles

you probably want to buy a car this is

important to do you like to customize

your cars if so you need to buy that car

you cannot customize a car that you're

leasing and the other thing too is that

you have excellent credit okay or you

have somebody who can co-sign for you

and you're able to get a nice low

interest rate on the car it's going to

be cheaper for you to buy that car

than it is to lease that car okay guys

that's pretty much buying versus leasing

a car in the nutshell leave me a comment

below if you guys want me to do a video

on buying a house versus renting a house

if you guys want to see that video I'd

be happy to do the research and give

that to you guys but and then if you

guys have any other video ideas as well

please drop me a comment and you know on

to my list I'm always looking for new

video ideas here but if you guys enjoyed

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watching this video

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