Leasing Vs Buying A Car (Pros and Cons) | How to Calculate a Car Lease Payment

[@saragrimaldi8093]

There is a small issue in all of this reasoning. The problem is that this assume we are in an ideal world where you car never break, you never need service because you do it on your own; and that you can trade your car in for the effective value, when you decide to replace it. Well, speaking by experience, this never happen. My familiy bought 2 cars and leased 2; same "trim" and comparable market segment (a sport car and a sedan); so from what I have seen, the advantage of leasing is pretty much there. - Leasing take you off the hassle to sell the car; even in the best case, you get like 20% less than the actual value when you trade in; as such; that 14% value that you pay extra on the lease, does not look that bad. - owning a car means take care of it, because you know that you will keep it. This means either you are skilled at car repairs and services, or you have to pay for it. For a leased car you have to pay only for the scheduled maintenance; and you don't care much about how you drive it , because you are going to return it back. For some, that is a factor. - The longer you own a car, the more you pay to keep it in good shape; wear and tear is universal, so a 5-8 year old car, won't be as efficient and cost effective, compared to a new car; and not everyone can afford to buy a new car and trade in the old one, every 5-6 years. - If you plan to spend once for a new car, then replace it every few years; you loose in the trade in every time you swap car; add that loss on a period of multiple years; and you get pretty high numbers. So from what I experienced; leasing works if you do NOT plan to maintain your car yourself, you don't care much about owning, and you want to have peace of mind to drive a car that if is a lemon or has issues, it is taken care of. Instead buying a car works if you can get always the best trade in value when you sell it, if you are able to maintain the car on your own or pay cheap for repairs, and if you plan to keep it for long time. We have one family car that we keep until it fall apart, but for commuting and leisure; leasing makes most sense financially. Clearly this is not for everyone; but when you see your family spend thousands on repairs for "classic" cars, you develop a sort of mentality that make you favor the peace of mind of paying for something just to use it; avoiding the hassle to own it.

[@Zack-dk3pt]

@Billy Hill as much as id like to advocate for woman having the ability to do "manly" things im going to have to agree with you because more often than not females are like the OP here and not even willing to do somethign as simple as their own oil change.

[@Zack-dk3pt]

so what you are saying is that leasing is for lazy people that dont like responsibility and having to put effort in to something that can actually turn a buck at the end of its life.

[@edwarddejesus4465]

Lol 5 to 8 yr old car not as effecient and cost effective? This aint no 1995

[@davidtolazy]

Billy Hill imagine being so idiotic and believing that woman can’t maintain their cars. Some people just don’t have the time to go and work on their car due to working weird schedules. Ex: Medical workers, Military members. Your comment is just idiotic and you seem to be at least 50 years old.

[@flashesbuck]

This is nonsense. You still have the liability for repairs or maintenance whether you buy or lease. Your lease contract states you must maintain the car per the manufacture's recommendations. Both cars are new, so covered for the same period and components regardless of buy/lease. Some leases "package" in a maintenance payment right into the lease payment, you could do the same when buying. Or pay as needed.

[@robertvillaneda3828]

The $25,000 car does not go for $460 unless you negotiate bird, A normal lease payment for $25,000 is around $250 including the taxes if you negotiate well and investigate the deals for certain vehicles

[@tenshi53]

I am impressed by how you manage to color your drawing with a black marker!

[@aerohk]

Lease is a life style. You get to drive new cars, for a small monthly payment. Great deal for those with stable income.

[@Zack-dk3pt]

you can have the same experience by financing and only pay half as much in the long run. you simply finance a new used car with 30-50k miles on it pay the same amount that you would on the same car brand new after 3 years and sell the car for several thousand. you still get to hop in a new car every 3 years but only have to pay half as much.

[@sunshadow9704]

I am pro lease. Yet, today the word cheap doesn’t apply. I used to lease mid range luxury vehicles with MSRP between 52-60K for around 500-55$ per month. Today, I can’t find any deal for Audi A5 with MSRP of 56K for less then 900$. Time has changed. Looks like buying is better option in nowadays.

[@SamuelBSR]

Buy a reliable used car that you can afford with cash. This is the best way to get more car for less money. No leases, no debts, no new cars.

[@dandyman251]

I bought a ten year old van with 120,000 miles for 6000 dollars. I have had it four years now. Just did general maintenance. Put over 50,000 miles on it. Still going strong. Getting pretty rusty, any major repair it goes to the junk yard

[@Zack-dk3pt]

well 6 grand over 4 years is only 1250 per year which is super cheap. leasing a new car will have you paying about 5 grand per year forever.

[@RPHacker777]

I know this is a 2 year old video but I see a problem with the math. At about 14:23 you start to talk about the cost of the money (using a loan calculator). You use the monthly payment of 469.69 and come up with 14.2%. However the $469.69 has the 9.5% (from 12:45) tax baked into that number. So the number coming out of the loan calculator is not just the cost of money but also the tax. So the cost of money should be lower.

[@ironthumb3048]

On all of these lease vs buying they always assume that there will be no out of pocket repairs on buying the car..I know people that ended up with several thousand dollars of repair work while this paying on a car.

[@xTRIPLExOGx]

This video gave a more realistic view of the buying portion.. much appreciated most figure the buying portion with a 3 year loan and a 800+ credit score which a lot of average ppl can’t manage

[@dragonballsuper9474]

I kind of see Leasing as better. As an average American will want the next new thing. Most Americans won't keep their car for 10 years. As soon as you're finishing pay it off, you want another one. And guess what, the car depreciates every year by a large amount. Image if someone hits you, its now considered an salvage title which is worse. In essence, your car will never go up in value if you RENTED or FULLY PAID for it. Today you bought your car 25,000 dollars. Years later, it is now worth 10,000 and will continue to go down unless you sell it. However, since you paid monthly for it, you paid much MORE in the process. If your car value can NEVER go up in value, it is considered a liability for a life time. That's why i find leasing better, of course you have pay much less than paying monthly on a new car, but a car will ALWAYS become an liability regardless. It is a settlement by American Society that you will need a car. There's just no point of buying one or renting one if you always lose value in it. The difference you keep between leasing and renting/buying a new car can go into things that can gain greater assets for you. Just my view.

[@iamkyleclimer]

Dragonball Super Then you will never own the car. The car will own you. You’ll always be paying a payment every month forever.

[@markrogers7923]

@@iamkyleclimer lol most people do that anyway regardless of leasing or buying.

[@robocop581]

Leasing is more expensive after the second lease because you are always paying prime depreciation in the first 3 years. A 6 year old car has already depreciated by 60% but will depreciate a lot less after. As for sales tax savings on a lease, that advantage does not exist if you're always on lease mode. So if you only plan to drive for six years, leasing is better but if you're a lifetime driver, best to buy and use that car for at least 10 years.

[@matthewkoch6937]

This made me glad I bought my car with cash. I test-drove it and then bought it two days later, had all the paperwork done the same day. The fuel costs, insurance costs, and maintenance costs are far less per year than either lease or car payments. Also, when the car stops running, I can sell it for scrap and use what I get towards my next car.

[@raymondcaylor6292]

Don't know when you figured out the puzzle but for me it was 1987, two and a half years after I bought a brand new 1985 Peugeot 505 Turbo and was out of pocket $2,200 for previous repair costs and looking at another 2K after transmission failing on trip to Atlanta. Sold it to dealership there for $2800 less than I owed the bank.Drove beaters until 2002 when I bought a new Lexus RX300 for 31,348 cash that I'm still driving today. Out of pocket upkeep and repairs $6,190 in 20 year's.

[@MrsBrookaltimore]

I've never had a lease (of fleece) nor considered one. The more I learn about them, the more I see I was correct. Good info!

[@jerrylundegaard2592]

The moment you used you wrote the word "fleece" you expose yourself. You expose yourself as a devotee of Dave Ramsey, America's favorite con man entertainer. The fact is for the right person, with the right knowledge, at the right time a lease may actually be the better choice. But of course that takes a curiousity which any Ramesy devotee lacks.

[@jerrylundegaard2592]

@debunker300 Assumption is usually wrong, as is yours. I am not. I do not troll, I simply state the reality of leasing. I do this because many people (you and Mr. Ramsey) seem clueless or unable to fully explain the realities of leasing. Your statement "with a lease, you have NOTHING ( is yelling intended to make it true?) of value at the end of the lease" is wrong. At the end of the lease you have a vehicle. Now pay attention. You can sell that vehicle. You can trade that vehicle. You can buy that vehicle for the price you negotiated at the start of the lease (you pay the residual value, you paid the difference between the price and the residual value during the lease). So you pay the same price whether you purchase or lease and then purchase. Or, you can give the leased vehicle back. A huge option for many people. Depending on the market, if the actual value of the leased vehicle is higher than the residual value, you may have EQUITY (yelling again?). See it is not so difficult to comprehend. And please spend some time learning about "depreciation." Depreciation has nothing to do with actual value. It is an accounting concept which attempts to spread the cost of an asset over its useful life. At any point, actual value will differ from depreciated value. The comical part is your apparent inability to grasp the fact many people who are educated in finance actually understand the concept of leasing and they actually do lease. Those financially educated people do not turn to fake financial experts such as Mr. Ramsey for financial advice. Got it now? LOL

[@jerrylundegaard2592]

@debunker300 DId mommy neglect to tie that little note around her little boy's wrist to help him find his way home tonight? BYE BYE, I YELL!

[@jerrylundegaard2592]

@debunker300 Son, fat and stupid is no way to go through life! Off to a Trumpy Orange rally with all the other obese, poorly educated this weekend, are you? lol

[@brandonbattle4874]

@@jerrylundegaard2592 you forgot "drunk", Dean Wormer. Now you're on Double Secret Probation!!

[@whydoineedahandle406]

This is a really, really good video. One thing left out however is when you trade in the car, you often lose thousands of dollars so it all comes out in the wash.

[@MrMiscVids]

Just trying to fully understand this leasing thing, exactly how do you lose thousands of dollars?... unless you have tons of excess mileage or wear and tear expenses

[@csabacrisan9412]

Another thing you need to take into consideration for the future when you want to resell your car is that diesel cars will be soon prohibited in many European countries, and petrol cars will not be sold by 2030s. This means your depreciation will be even higher! (Then comparing to 10 years soo, for example)

[@Kayy_SS]

Conclusion : If you are a guy who does not mind driving the same car years after years ( as long as it can take you from A to B) then buying the car is your BEST choice. But if you are a guy who likes to drive/experience a new tech car every 2,3 years than leasing is your best bet.

[@Zack-dk3pt]

not true because financing a new car with like 40k miles already on it would have costed you the same as leasing it brand new but the difference is at the end of your payments you can turn around and sell the car for several thousand.

[@tiw2572]

That is idiotic. If you want to die rich, buy your car. If you want to die poor and drive a new car every couple years and lease.

[@Thedoctorjosh]

@@tiw2572 dude. You're not actually making an argument, you're just parroting Dave Ramsey

[@tiw2572]

@@Thedoctorjosh That's just dumb. Dave Ramsey has good points albeit he is not always in sync with my beliefs. I leverage investments more than he recommends, especially in real estate. So, no I don't just repeat and follow Dave Ramsey. But, he is 100% correct with respect to leases. They are nearly always a terrible deal. Think it through, it is common sense. If you want to make payments the rest of your life to have a new car yearly or bi yearly go ahead and continue to be a payment maker, instead of someone in a few years who can afford anything they want, with cash. I can, and that is how I did it for 40 years. I drive a four year old jeep grand cherokee limited that I paid cash. I think I will trade it in for my third new vehicle in my life a new ford truck this year. I will never ever have a lease or payments again. If all I could afford was a 3 K used truck that is what I would buy. Never let your wants overpower your budget. Take that to the bank. Be smart.

[@NYCCamper]

@@tiw2572 Well either way your dead.

[@number1fansince]

Wow I'm definitely saving this video. Thank u for the great information

[@dan-cherrypicker-man]

Excellent video, you made a very complicated subject understandable. Thank you

[@NextLevelLife]

Thanks, I'm glad you enjoyed it 🙂

[@TucsonDunbar]

Really great video. Thanks for the info. Best part is that it's so non-biased, unlike Ramsey's videos.

[@terrystamm9096]

You do not have to turn in a car at the end of a lease. If your car has value greater than the residual value, you can trade for your next vehicle and use that extra value. In addition, if you anticipate going over on your mileage then trade the vehicle in to any dealer and their are no penalties or other fees to pay.

[@DayoAworunse]

New technology in trim levels. Most lease offers people see are the lowest trim with nothing but bare bones

[@ajfurnari2448]

The dealer ads you see and hear everywhere specify what model that base lease payment is for. However, you can configure higher trims/features and lease for a higher cost. Trust me, any dealership will gladly sell you a higher priced vehicle

[@sunshadow9704]

100% wrong. Opposite. With lease mostly you drive middle or top trim.

[@DayoAworunse]

@@sunshadow9704 yeah I’ll agree I was wrong back then. For sure people who lease get upper trims.

[@AGENT-J-bt2mm]

Sweet drawings my man!

[@NextLevelLife]

Thanks, Jake 😀

[@bluegorillacookies]

I've always thought leasing was stupid, but I feel like I've had an epiphany. The amount you calculated for leasing is way off in my experience. I just researched a car that leases for $323/mo, everything included, with 0$ down. The same car would cost about $485-$520/mo at 4-6% for 60 months. That's a difference of like $160-$190/month. After 60 months with a purchase, you've paid $30-31k for the car. If you keep it for ten years, you will probably have to pay $10k in maintenance and repairs(?) So that's about $40k for ten years of ownership, assuming your car isn't worth much of anything at the end of ten years. You also risk being on the hook for the depreciation if you want to resell it earlier. If leasing the same car, you'd pay $38,780 over ten years (3 and 1/3 of 36 month leases), not counting for inflation. So it seems like leasing is better to me. Maybe leasing and putting the extra $150 per month that you save (vs. making a car payment) into the stock market would be even better. If it wasn't having to preform maintenance as the car ages, buying would seem best to me, but at this point leasing seems the way to go.

[@haha-cm6pg]

Leasing is fleecing.

[@MrFrozenCanuck]

Buy a used car and learn how to do some work on it yourself. Avoid dealers they are demonic.

[@saragrimaldi8093]

My family has 2 classic cars; they are a trash bin for money, unless you have the time to take care of it yourself. And if you make 6 figures a year; you have virtually no time to work on the car, so you end up paying someone else and loose money. One thing is oil change; another is to replace gaskets on the engine or seals; that is something that either you are willing to learn and have skills with it, or you pay someone to do it; as such, that dictate if a used car is worth or not.

[@bluegorillacookies]

Everytime I shop for a used car, they either want just as much for it as for a new car, OR more than half as much as a new car, even though the car is in the last half (the most unreliable, and expensive to maintain half) of it's life. Plus, the interest rates for used are very high. Plus, cars are harder and harder to work on, with their computers, etc.

[@spraypainting1982]

You think that repairs are cheap or easy to learn? Lol good luck

[@alvinsimba734]

@@bluegorillacookies thats why you rather get brand new..

[@davesecx]

Not everyone has the time, space, know how to work on cards. Not all dealers are bad, you just gotta find a good one. Trying to DIY a major car issue could lead to you screwing something up and end up spending way more than a dealer would charge. It's the same reason people go out to eat instead of cook themselves, or take a computer to someone to get repaired. There are tons of things people don't know or can't learn. That's why these business exist.

[@reignepineda6530]

Love ur vids! I learn so much n ez to understand.

[@RANDsreviews]

Thanks for the calculation! This is so useful! Keep up the videos. Love them!

[@NextLevelLife]

Thanks for the support! I will do my best to keep it up :)

[@rizwanulhaq6809]

i would disagree with this analysis, in layman’s term if you want a new car and change it regularly to another new one even after a period of 5 years considering your car is anreasonable one and not a small dinky, you’ll see there is not much difference and much less of a hassle with leasing, if your car price higer, leasing will by faar win on this (for preminum cars with low reslae value). Now if you buy a 5 year old car and want to keep it another 5-10 years, hands down buying is the winner here

[@saragrimaldi8093]

Well put. Many times people ignore the waste of money that is a frequent trade in. Then if you are a master in deals; that's different, but most people loose a big chunk of money on trade-in, because that's where the money are made at the dealership (and of course the financing part).

[@Dre2Dee2]

If it takes really good credit to get a lease, that would SEEM to indicate it has some value to it. If it was such a rip-off, why have a credit restriction? People with good credit dont tend to want to get fleeced

[@Zack-dk3pt]

because you still need to prove that you are reliable to make payments and you have a long standing history of being responsible which also indicates that you are not likely to try and steal or damage the car. it is still a rip off if you plan on leasing for long periods of time or indefinitely.

[@eliascastillo1641]

I’ve never leased a car so I didn’t know bout the mileage restrictions. If that’s the case would it be better to buy a around town car and rent for travel?

[@ms3er396]

Don't think of mileage as a "restriction" as it's really not. The cost per month is based on usage which determines the residual value at the end of the term. Leases can be had with any amount of mileage you wish not just the typical 6,8,10, 12 or 15k per year you hear about. If you go over, the only part of the additional fee at the end which is a penalty is going to be the difference between what the cost of a mile is up front vs at the end. Typically it's about .$20 per mile ahead of time and $.25 per mile at the end thus you're paying about $.05 per mile in a true "penalty" but it's really not much.

[@stookis8954]

Keep in the mind the disposition fee that some makers will charge you at the end of your lease IF you choose NOT to lease another vehicle-Be sure to read the fine print

[@mcclungfarm7965]

I have leased many times. Generally the down payment on the next lease comes from incentives for the manufacturer. If you lease a FORD at the end of the lease FORD will generally give you $2-$4k toward another lease. I got $4k 8 months ago when I turned my lease in. That being said, if you switch to a different brand you will be out of luck.

[@NextLevelLife]

Interesting, I didn't know that.

[@TomTom-gn9mp]

McClung Farm I wish I got 3k to cover my excess mileage. No big deal though, I can just buy out my lease then sell it 1 year later.

[@WillemvanKalsbeek]

I don´t understand step 7 of the calculation. Why is the interest calculated over the stickerprice (+extra fees) + the residual value?

[@sarojinidevithambapillai9146]

U explain everything in leasing also ur good artist.

[@MsNando21]

I think it is better to does not mix price with taxes and without taxes. I did this exercise in my leasing in Montreal and I will pay 2.99% year only and end after 03 years I will decide if I buy back or just to take another leasing or buy a second hand car. It is depend of available offers at time when you take a decision.

[@andrew123mason]

Great Comparison - We've leased and purchased cars and as shown, both financial instruments have pro's and con's. And yes, some dealerships offer better lease options based on credit score and down payment than shown in the example. It just depends on your financial situation and if the monthly payment is more important or necessary than owning/having residual value at the end of the contract. Remember if you go over mileage on a lease it can get very expensive and if you choose to purchase a car remember to factor in maintenance and repairs once the warranty expires. AND I'd like to offer a third transportation options which is to not own a car at all and use public transportation, Uber, Lift, ride-share etc., as a way to get out of credit card or other debt. If you add up automobile insurance, taxes, monthly payments and maintenance/repairs you could probably use alternative transportation for 18-24 months and pay off all of your credit card or other debt and still have money left over. Of course, the third option is more attractive to Millennials and those living in areas that offer alternative transportation. Food for thought!

[@NextLevelLife]

Great food for thought Suzie, thanks for sharing! Maybe I'll do a comparison of the pros and cons of alternative transportation options such as ride sharing in the future. I've never looked at the numbers myself, but I've heard that it can be a great option for the right person and would be interested in seeing what I may find out ☺️.

[@ms3er396]

keep in mind mileage overage isn't really "expensive" as it's going to "cost" you more if you drive more regardless of how you pay for it. On a lease you're assessed a small penalty vs the cost to have paid for those extra miles up-front and that cost is only incurred some of the time. On my wife's cars we always do 12k miles per year even though she tends to drive closer to 15k miles per year. Why? Because the residual cost difference between the lease up-front to go 15k vs 12k was $15mo more. So why would I pay $15mo more up-front as part of my contract when I can get it that low at the end. How? Do the math. 9k additional overage miles at $.20 per = $1,800 or roughly $22mo more. Thus the difference is only $7mo or a total net "cost" to me to delay of $7mo or roughly $250 total vs having gone 15k per year up front. I can easily negotiate that $250 when buying a new car, especially if you're trading the lease in or dropping it off early. For decades most EVERY car company offers either a pull-ahead deal on their new cars or a competitive rebate for buying their car vs the brand you have now and they will up that to gain your business. NEVER pay more than you have to or put money down on a lease.

[@MoSec9]

Third option is not really an option for most Americans. Definitely the way to go if you’re in New York City and D.C. Everywhere else, that’s just not available, I don’t think being a millennial has anything to do with it. I’m a Gen X and I would’ve loved to have the option of a reliable public transportation similar to Europe.

[@mem68sf]

Loved this video. So helpful!

[@jr.2461]

Great video... again!! Thanks for all the nitty gritty (calculation specifics). Those are the kind of details I really enjoy..

[@NextLevelLife]

Thanks JR! I'm glad I was able to make it a little more specific for you this time around 😉.

[@lauriefucillo2996]

@@NextLevelLife Great

[@Matt-wf7ry]

Not sure where in the world you are getting your leases from but run away if the dealership is trying to make you pay $428+ a month on a $25,000 car because you are getting absolutely ripped the F off. You can find leases in the $250 - $350 a month range for cars that cost in the $35,000 range. Anything in the $25,000 range would need to be far less than your calculation. I literally am leasing a roughly MSRP $32,000 Jeep right now for $360 a month including ALL fees and the down payment for over the course of the three years.

[@sarahvaldes6917]

Only time leasing is good is when you build a relationship with the car brand, I have a Kia. I’ve been doing it since high school (started working at 14 years old at my local grocery store). When I was in college, I had a commute far. I was getting close to my miles, I called my guy and asked him if i May turn in early and have a deal. They supplied me with a deal, if I turned in my car and rebought with them. I saved myself miles, got a better car for the same price. Because the car I wanted was a better model, and the guy wanted to keep me as a costumer. Now I’m on my 4th car with Kia, still paying the same from high school for a 2019 haha

[@thattannerguy856]

But that means you've always had a car payment. Where as buying a car it's eventually paid off and you have no monthly payment until you buy another car. Which is definitely a person decision! I've had my car for almost ten years. So about 5 years of no payment which is nice. It's hard to justify getting into a payment again. But, I know I'll have to bite the bullet and buy a car, used or new, eventually haha. But as long as your happy, that's all that matters!

[@sarahvaldes6917]

I kinda of wish I did buy, the past week I've been learning how to save. Now I'm I wish I didn't, because I don't mind spending $240 a month, but now that I have a mentally of trying to move out, that extra $240 would be huge! I don't regret my leasing, I lived it up while my parents somewhat helped me. Now I'm doing grown up stuff :-( post-grad life isn't as fun.

[@ms3er396]

@@sarahvaldes6917 leasing still gives you the option to save and in fact more-so during the initial 5yrs. See my previous posts, the idea of leasing is to do exactly that. What was the selling price as noted on your lease? $27-30k? Just figure out what your 5yr payment would have been, subtract your lease payment and save that every month. Example, my monthly budget on my wife's vehicle was going to be $650mo. We lease a 3/36k for $480mo but just because we scored a payment that's lower doesn't mean we adjusted our "budget" we simply save the difference ($170) and invest it. Now instead of that equity sitting in a car that depreciates it's in an investment making money for us. At the end of 5yrs it will have accumulated just over $12k. We do the same for my vehicle, but now the money is higher as as I have a nicer car. At the end of our leases to say 5yrs out we use that money to invest in rental property. If you stick to this plan you will have a new property and rental every 5yrs and that time frame will shorten as you age and earn more. We have a fair number or properties and residual income every month coming in. Add in the renters are paying them off for us, thus our equity in an Appreciating Asset is a much smarter and safer move. Don't stress about paying off cars, that's a dumb way to lose money. Put the savings in appreciating assets/investments so it makes you more money and treat a car like an electric bill.....it's just an expense. Unless you're poor and have to drive a cheap old car, live a little and enjoy a nicer new car while at the same time making money.

[@gambit9492]

Real good video

[@NextLevelLife]

Thanks!

[@tcniel]

Well done video, clear and concise presentation.

[@NextLevelLife]

Thanks!

[@dennissvitak148]

Personally, I have leased just one vehicle. In 2009, I leased a Hyundai Elantra. It was a nice car. 18 months later, I went into the dealership to help my daughter out with her purchase. Due to the financial troubles in 2007-2010, nice used cars were at a premium. As part of the lease, I had a written opportunity to purchase this vehicle at the end of the lease period for $10,800..which was then six months away. They were retailing at $14,500. They wanted my car, bad. I told them I would give it to them for $14,000, and apply $3200 to a trade in for a new Sonata. Worked like a champ! I received $3200, JUST to give my lease back to them early. At $150 a month for 18 months, this is $2700 total cost to me for the lease. Yes...my lease was essentially free, plus another $500. What did Hyundai get? A very nice Elantra, which they sold for a profit, and I bought a brand new Sonata Limited, which I kept for the next seven years. Still...I don't recommend leasing. Like renting a condo, it may be a little bit cheaper, but the feeling of driving your OWN car vs. a rental, for me at least, was huge. Yes...it's a rental, just like Avis or Hertz. Some dealerships will look at every little door ding, scratch, or worn spot throughout the vehicle, and charge you for them. Yes..the contract specifies "normal wear and tear", but you can't argue with the dealership, not realistically. It's another profit point for them on the lease.

[@shawndorsey-stinson8489]

VERY INFORMATIVE

[@NextLevelLife]

Thanks, Shawn!

[@Zenaku222]

Great video, answered all my questions

[@NextLevelLife]

I'm glad to hear you found it helpful!

[@simplosimplo6474]

got a loan from my bank 60months to pays my car, I 'm telling you it's better than leasing a car. I paid off my car this month in less than 3years😂😂😂 my bank was like "you are a smart boy"

[@ms3er396]

Congratulations. Seriously. Each method is dependent on the owners goals. What's the current value of the vehicle you just paid off? Regardless of the amount, there's opportunity cost to that figure which is now tied up in the vehicle just sitting there. The idea of leasing is to avoid that and instead to use that equity to invest and earn money for you vs just staying tied up in a car.

[@josephrissler9847]

There are two potential benefits to having a newer car: improved safety features, which can reduce insurance costs (and are obviously just a good thing all-around), and improved gas mileage.

[@michfinn230]

Yeah I learned the hard way. I leased for the X a 2017 KIA sorento V6 LX for 3 years 36,000 = 331.00 month and due at singing 5,290.00 She went over 11,500 miles 20 cents per mile plus turn in fee 400.00. The payoff was another 20,000 after putting 18,200 plus taxes and Excise taxes 1,800 and new tires 700.00. It would have cost me 40,900 dollars when they offered it to me at 32,500 that day. The only thing I did right was the wear and tear warranty 900.00, it was worth it. All said and done invested approx 23,000. Leasing is not for me I would have rather bought and have something for nothing. Oh! of course on turn in they wanted to see me another lease at 395.00 month same vehicle less options lol! Trade in value for X 11,800 wow! I guess I could have bought the car outright and sold for 17,500 as private seller to much bull crap the X would had a bird, red herein. I just let it go, it was the easy way out 2,800 more done.

[@wristoww]

I'm sorry that happened to you, but unfortunately that's partially due to you picking a model that, for all intents and purposes, just leased very poorly. For comparison, my girlfriend is leasing a 2020 Volvo with an MSRP of 49700 for 375/month with 375 (first month's payment) due at signing. 13,500 over the course of 3 years on a 50,000 car. I can guarantee that the vehicle will be worth much less than 36200 at the end of the term (a 2017 model at the same dealership with almost exactly 36000 miles is on their lot for 20,000 right now).

[@kdc.4827]

Thank you for the great content.

[@NextLevelLife]

No problem! Happy to hear that you are finding it useful ☺️.

[@Cupillac]

Leasing is often the better route if putting vehicle through your business. Cousin bought new truck few years ago, he laughed at me for leasing my vehicle. Few hundred Ks over his warranty and engine blew. He was close to $8,000 repaired and runs like garbage now too

[@thoro0308]

I bought my 2018 camry Le used for 18k without taxes at 13k miles happy with what I got.

[@tomiasthexder7673]

When quoting Dave Ramsey, people forget his goal is to get people out and keep people out of debt....he is dealing with mostly financially stupid and illiterate people who have no concept of money management. His strategy is good for those people.

[@Zack-dk3pt]

fair point made. honestly the only fair point i have ever heard in favor of leasing. most people try to justify leasing in situations where leasing completely replaces owning a vehicle.

[@jearmeymorgan8297]

Yeah it's pretty obvious that they'd check mileage once at the end instead of one every year lol.. I've never had a lease either and I can make that assumption on my own.

[@vikasadvani]

Good video but bad example of lease, a $25k car wouldn’t be leased more than $250/month with at least 10k miles per year.

[@StefanIordan]

Most people DO NOT afford 14-%15% a year for a lease. They don't know it and they don't believe they can't afford it because 450$ a month is looked at something "you just have to do". In the meantime they live paycheck to paycheck and have no assets whatsoever.

[@NextLevelLife]

There is a lot of truth to that Stefan. Hopefully, through videos like this and others we can help change the mindset that a lot of people have and help them stop living paycheck to paycheck with no assets whatsoever ☺️.

[@ms3er396]

@@NextLevelLife cars are the worst place to invest money into what you would reference as an asset. They are depreciating assets. If you want to show people how to stop living paycheck to paycheck then explain to them how to lease and leverage their money to work for them. Leasing done properly can make you money using your money vs dropping it all in a depreciating asset like car. $450mo isn't a lot of money in 2018, especially for transportation. If people are truly having a hard time spending $450mo on transportation then they shouldn't even be buying a new car, they should driving a 4-5year old car and working to better their income. However, that said, if they can afford $450mo then they would best off leasing a sub $200 mo car and investing the $250mo. difference into something that will earn them money.

[@deantan4080]

I dont think its 14% per annum. Isnt it 14% for 3 years? This means they only make 4.6% a year in loans.

[@Xachremos]

>have a car payment to get to work >work to pay the car >repeat until 65 >die pennyless

[@saragrimaldi8093]

While if you own a car, which is an asset that always depreciate, unless it is a collectible or classic, you spend a comparable amount of money in maintenance in the end. So while living from paycheck to paycheck, they own a car that cost them money just to run. Doesn't seem to me a great deal to be honest.

[@johndbro1]

this was great, very helpful

[@NextLevelLife]

Thanks, John!

[@nread1135]

At least in the uk, leasing makes sense if you have no very specific car in mind but just a few parameters. Watch the specials every month and leasing always comes out cheap. You just have to be happy with not owning the depreciating asset.

[@Obbliteration]

The animation for the = + and x have very low fps. Please fix

[@richardrybarczyk5522]

Many leases nowadays include gap insurance, you definitely need to ask about that before you sign the contract. I don’t put any money down on a lease, basically you’re just handing them cash. I always look at vehicles that I can afford without a down payment. Leasing a $60,000 vehicle and having to put 3 or 4 thousand dollars down is not a good idea, in my opinion. Will be looking for a new lease in about 6 months, hoping there are some good deals available.

[@njack1994]

Now does that estimated residual value affect resale value if you own the car? I mean just buy a certified pre-owned vehicle that exceeds the estimated depreciation amount if that's the case.

[@checkmateking2854]

Buying vs leasing is like buying the whole pie or just buying a couple pieces of the pie

[@stedye]

Loved the pie analogy. No matter which way you go , you get to taste the pie.

[@joejones5653]

@@stedye I saw a girl with this tee shirt that said if you like my melons you'll love my pie!

[@Anthony-nx5yu]

You do get equity if you’re car is worth more than the residual value. (Usually when you’re under mileage), but that’s only if you get another lease or buy something from them. If you just return it, you do not get the equity.

[@mikes8218]

I guess I'll stick to buying

[@SchoolofPersonalFinance]

Those lease numbers used seem way off to me....

[@deborahstensvaag2033]

I’ve always felt buying was better. Even the term “Leasing” is just a FANCY MARKETING term someone cooked up to make the idea of renting more acceptable to middle class people. It sounds so sophisticated 😂 when in reality its just another way to never get out from under a revolving charge. All these numbers about the monthly cost of purchasing a car vrs leasing... yet no one addressed the fact that once my car was paid off I enjoyed many years of no payments. All That cash stayed in my pocket, except for a few repairs. Renting a car is a slick way to insure you will always and forever owe someone money. I guess that’s the new American Dream!!!

[@robocop581]

@debunker300 I have a friend that leased for twenty years. He couldn't figure out how he lost money but he felt he had nothing to show for after twenty years.

[@robocop581]

@debunker300 People that Lease lose out on the residual value of a car after 9 years. Based on 18% depreciation the residual value after 9 years is 20%. So if I lease a $30,000 car every 3 years for 18 years straight, I will lose out on 40% residual value which is $12,000. I also pay admin fees every time I lease. For 18 years at 3 year lease periods, that's six admin fees I have to pay instead of two if I buy a car and own for nine years.

[@Crypokeeper2275]

I bought a 2008 Acura TL type S used in 2011/12 with 45k miles for $20k Car new was $39k Paid the car off in 2 years even though I had 4% interest. That car still drives like a champ and looks better then most new cars that all look the same IMO. With 220k miles with no issues. Regular maintenance will keep most cars running a long time. I could buy a brand new car but for me I’d rather have a reliable car to take me where I need to go and my money can make more money for me invested. Most people in new cars are playing keep up with the Jones. I said most not all before the barrage starts.

[@doublezeroisourhero]

Yeah but ur car is like ur house I own outright all my cars and I would agree I would’ve been better off buying them all used because they were all new but I would never buy a car like that

[@RomanMakovetskiy]

Best way buy with the cash, all know this. If I can't - I'll go with the 2-3 years lease as technologies changes rapidly. Or I'll dive into loan if I really want to stuck for life with "THIS" car only... other way just doezens headaches for decade(s)

[@lovebeat6302]

Sir, May I know the application which one u r using your video awesome?

[@azeritis]

1. Don’t lease a car car with a low residual value. If you change the residual value to 60%-62.5% the maths change dramatically 2. If you buy the same car on a 6 year loan and keep it 7 years accounting for maintenance and repairs the difference isn’t as great as people make it out to be. 3. The best option financially will always be to buy new or used with cash and keep for 10 + years 4. We have one life to live, if you can afford a lease or a new car without compromising your family’s wellbeing and future go ahead and do whatever you please

[@yllwmitsu19ehh80]

15:05 Not that much different? Is that the numbers with a 0 down payment? I doubt it seriously

[@lavayuki]

I bought a used car by cash outright. I just prefer to own it rather than lease as then I can use it for a long time. Most cars last over 10 years now and 3 years seem really short.

[@NextLevelLife]

I operate in a very similar way 😉

[@sunshadow9704]

You drive very old car. You likely don’t enjoy it as you know most cars on the road are much safer, consume less gasoline and offer range of useful features. Why lock yourself in that box? Few thousand dollars saved not worth it. The lease isn’t expensive. At least it wasn’t till recently.

[@lavayuki]

@@sunshadow9704 My car isn't that old, it's only 4 years old, a Toyota Yaris Hybrid. I was just able to afford to buy it in cash as Toyota's are quite cheap overall.

[@Hustwick]

Buy a newly-new second hand car (say 2-3 years old). The previous owner has taken the biggest hit with depreciation, your car 'should' not need big maintenance bills (if anything, they happen in the first 6 months), and at least you own the car after you've finished repayments (if you didn't buy it outright). Now you've got a car to trade-in for your next second hand car 2-3 years later (or sell it privately and use that as your deposit).

[@jaxav8r]

Hello quick question - I know end-of-year can be a good time to get deals on BUYING a new car...but does end of year also offer good deals on LEASES? Or are December specials only good for buying?

[@NorthernsoulBoy63]

I buy my cars purely because I like to keep them spotless plus I upgrade them occasionally. It's my hobby so never will I lease one plus when you sell on the person who buys it is getting a great car for a fair price

[@DarkHorseParatrooper]

Where do you get a 9 percent sales tax? I live in california... its slightly over 7...

[@Xachremos]

Consider yourself lucky. I get to pay 15 percent in quebec

[@margaretc5679]

10.1% in Seattle.

[@dennissvitak148]

I didn't watch the video, don't need to. If he has covered a point I will make, then good. First...with a lease, all you are buying is the depreciation. Look at a Cadillac, and see what a new one sells for two years later. So..rule number one. If you HAVE to lease, lease a vehicle that holds its value well over time. Second...when the lease period ends, you have the option of purchasing the vehicle. If you're lucky, like I was, the purchase price will be less than the trade in value, and you can use it as a down payment on your next lease or purchase. Third....DON'T USE A LEASE VEHICLE WHEN THERE IS ANY CHANCE YOU WILL GO OVER THE MILEAGE. I had a co-worker that took a brand new leased car, and drove it 4500 miles on a long vacation. He was screwed...and at the end of the lease, instead of buying the car outright, he paid THOUSANDS of dollars to get into another car. He would have been smarter buying the car, then trading it.

[@kingkang6877]

Dennis Svitak how many miles was your friend over the threshold limit?

[@dennissvitak148]

@@kingkang6877 - I believe it was about 11 thousand. At 25 cents per mile, almost four thousand dollars charge.

[@kingkang6877]

Dennis Svitak ok he went waaay over the limit. I'm debating between buying vs leasing a bmw 2 series but leaning towards leasing (knowing I pay the depreciation) but I wouldn't have to worry about $$$ repairs past the 50k miles, which is about 3 years (the length of a typical lease term).

[@canuckfixit7722]

Seems like "double-dipping" in Step 7 where the residual value is added back in with the full purchase price of the car plus the fees to calculate a "rent" amount. What's up with that? Why not calculate it based on just $26,200? If this is the typical method of calculating lease payments, no wonder it's a total rip-off!

[@TheKartik1989]

Question: Why will the dealer fee be considered in the depreciation amount? Shouldn't it just include the sales price and the residual value?

[@DSRedBoi]

Came to the conclusion that I'm going to lease.

[@tooslowstar]

How do you use the calculator to find out the interest rate?

[@sunshadow9704]

Money factor multiple by 2400.

[@LanMindYT]

I’m curious, so why do dealers say it depends on your credit that determines your monthly payment?

[@Proverbialfunk]

That negotiated price is a static # you agree on (usually around the MSRP). The interest rate is a variable, that is dependent on your credit score. The interest rate determines your monthly payment, along with your terms (time/duration) and agreed upon price.

[@Zack-dk3pt]

because high risk means higher payments. same thing as car insurance.

[@wipedlensfotos]

My dealership is calculating lease payment on the retail price plus tax. Is it normal?

[@wordstothinkabout5386]

Benefits should include lower maintenance cost (no tires to buy, brakes, belts, etc.)

[@opheliacox7965]

6:38 Wrong... If you buy a brand new vehicle and put 30k per year as apposed to the normal 12k and 3 years later go to sell that vehicle with 90k on it, you will incur excess mileage fees on the value. Mileage fees up to 40 cents per mile. Do the math....

[@Tiltasauras]

You can have equity at the end of the lease, it’s actually more common than you think depending on which car you lease. You can sell the car and payoff the lease if you have positive equity at the end of your lease

[@Don_DeMarco]

Cot dayum! Almost $470 a month and that's not yet calculating your insurance, especially since insurance is usually higher for leased cars, according to what I've read on auto insurance websites.

[@malikahalalshaikh8715]

Domonic Ramos actually i just came from toyota dealerships and insurance is included in the lease you don’t have to pay for any maintenance while you’re leasing

[@orsivan5731]

These videos are mathematically correct, but they give a terrible idea for people on how to buy a car.

[@minusCEE]

So if you want new tech, new car every 3 years then leasing is the best choice. If you just want to get from A to B then buy a corolla. Just sold my mom 2000 camry for $1800, yes it's 20 years old with only maintains were oil change twice a year ($60/year), and tires replacement every 4 years (around $250 every 4 years for a set of 4)

[@sunshadow9704]

Sad for so many years you never enjoyed a ride. Get behind a wheel of normal vehicle (audi, bmw, Volvo, porshe) and realize what you have missed. Why do you need all that saved dollars?

[@shawnhayes625]

Why would you be charged a sales tax when leasing? There is no sale.

[@dennissvitak148]

Don't ever lease a car in Missouri. They have a thing..Personal Property Tax, that is about $800 a YEAR for a new, $30K vehicle. Dealers absolutely will not pay it. So..You lease a Sonata, pay $199 a month, which is $2400 a year, and THEN have to fork up another $800 the 1st of January. Let's add another 25% to your lease costs!!!

[@ritzone8585]

Im so tempted to buy or lear a car after im done paying off my debt, but id rather buy a house.

[@danfontaine6992]

Who's the second time that I've leased a truck for my business right now on a three-year lease I only have 7000 miles in the end of the second year I'm supposed to have 30000 on it at the end of the lease I have a lot of options at the end of my lease because the miles or so well because I just use it for business I can buy it I can buy it and then sell it and get that money that way or they're going to offer me more money when I turn the lease in and I don't have to worry about maintenance long-term so far I've done nothing to the vehicle except for oil changes so it all depends on where you're at leasing I'm finding out for business in the business that I'm in is very beneficial even if you're paying 14% interest you're able to write depreciation off with a business

[@kandywestmoreland5164]

How much should a $30K car lease for. 36 months. I’m paying $485/mo. Have I been had?

[@genhen]

Kandy Westmoreland very bad deal, yes you have been tricked

[@Zack-dk3pt]

yes because you should have financed that same exact car but with 30k ish miles on and and still only be paying 500 a month for 3 years and get to keep the vehicle after the 3 years.

[@mmorales9453]

Calculation is whack, a $25,000 car does not lease for $469, that’s crazy, your factors are off.

[@7vj7ik]

You have very nice hand writing. 👌

[@drewbeverley4135]

Hi NLL, I'm enjoying the channel a lot, i think your videos are great. But can we look into getting rid of the music? Over a 15 min video (more if i'm watching your vids back to back), its quite horrible.

[@NextLevelLife]

Tealoafer, I have looked into getting rid of the music since there have been others who have expressed their displeasure with it but unfortunately due to my current recording setup (i.e. my room) if I get rid of it there is an echo that becomes very noticeable and distracting. Down the road when I get a better recording setup I will probably remove the music, but at this point in time I haven't been able to figure out how to get rid of the music and the echo. I'm sorry to hear that it is bothering you (again you are not the only one) and I am working on a way to resolve the issue but at this point in time I haven't figured it out.

[@NextLevelLife]

Thanks for the feedback Ali!

[@jimdandy8996]

How is a car an "asset" when it depreciates in value - and has the said maintenance expenses? I'd rather be a 1099, lease an expensive car, and help bring myself down into a lower tax bracket because of the write-off amount. Compliment this video with the Stephan Graham Channel video on auto leasing.

[@jerrylundegaard2592]

A car is an asset because it has a value. That value is based on a number of factors such as age, condition, market, etc. That value constantly changes. At any given time that value may be higher than the liability (auto loan) which makes the car a net asset. Or the value may be lower than the liability which makes it a net liability.

[@POPtheHOBO]

So what if I just RENT cars for as long as I wanted?

[@KNByam]

Sure, try that route. Depending on where you lets go with a conservative estimate of 50 dollars a day x 30 days. Nope.

[@POPtheHOBO]

@@KNByam I guess I should have stated that I basically ment for like certain occasions. For example. I own a pick-up truck. I pretty much use it for "work". It works FINE, it's just not very "pretty". So if I want to go out on a lil' date or a week or 2 long vacation out of state. I just wanted to know is it FINANCIALLY smarter to just buy a newer car. or keep a leased one around. Or just rent a nicer looking car when I need one?

[@ms3er396]

You can. Most rental companies do long term say 30 day rentals for a significant savings over the daily or weekly charge.

[@Zack-dk3pt]

then on average after 10 years you would have paid about 30,000$ more than if you just finance a new used vehicle and kept up with maintenance for the 10 years. or you would have paid about 15,000$ more after 10 years if you financed the same car used and sold it for several grand at the end of your payments. you can still have the same new car experience every 3 years by financing.

[@specialorder9379]

My head hurts...

[@abcdLeeXY]

If the automakers are pushing everyone to lease a car, trust me they’re not trying to help you save money.

[@iamkyleclimer]

abcdLeeXY Bingo

[@Matt-wf7ry]

It is a win - win for all involved. You get a new car every 3 years that you pay a little more over the long term than if you bought one and the dealership (this guys calculation is way off, you would pay far closer to $150 - $200 a month on a $25,000 car lease) will then turn around and sell the car for not much less than when they put it on the lot brand new because you took care of it.

[@tablet2016]

He admits he's never leased a car. His figures are theoretically correct but way off in reality. Inaccurate advice. Don't give advice for a process you have no experience.

[@TW-fx2jx]

Can you add any tips? I want to lease an EV Chevy Bolt but have always thought leasing was usually not beneficial.

[@KZ-do6il]

Some people don't need to be ripped off to realize they got taken...

[@shawncarr9855]

You are leaving out many important factors in leasing versus buying. Does the vehicle in question have "lease cash" (incentive to the customer to "buy down" the cap cost} or does it have cash from the manufacturer to finance with their bank. This can be thousands of dollars in either direction. You used an "average" rate on the purchase in your video, but used an inflated money factor. .00125 is about a 3% rate. a more realistic money factor to use would be .00045 or lower. There are many leases that are less than that. .00001 is quite common. which would be about a quarter of a percent in interest. It seems like you used #'s that purposely made your point that leasing is not advantageous. You are not factoring expected repairs when out of warranty on the purchase versus lease. I can point you to many leases on $25,000 vehicles with payments lower than $250 or the 1% that most avid lessees aim for. A $51,000 vehicle that leases for $369 a month is just one of the latest deals that can be had. There is also something known as multiple security deposits that can lower money factors on less than optimal lease deals. Check out www.Leasehackr.com . It will open your eyes. PS. DAVE RAMSEY is a joke.

[@mopar21]

Lol leasehackr states they would buy over lease a WRX...