Here’s a common questions I’m asked…is it better to lease or buy a car, and which one is a financially better move? I’ve done both, and these are my thoughts as to which one is better - enjoy! Add me on Snapchat/Instagram: GPStephan
The short answer is that it really depends on your situation and how long you plan to keep the car, but I’ll describe the pros and cons of each and what might work best with you.
Lets start with owning and buying a car. First of all, you can buy pretty much whatever car you want, unlike leasing where it’s almost always a new or newer car. Generally, unless you just buy your car outright in cash, you’ll end up financing the car. This is when you take the cost of the car, minus your down payment, and get a loan which you’ll pay off over a specific period of time - the most common being 48-72 months. And then you’ll also pay whatever state sales tax is on top of your purchase. Factor all that in…and then once you pay off your loan, congratulations - you own the car free and clear. And then when you go to sell it, you’ll get whatever price the car is worth - minus whatever you might still owe on the car.
However, a few drawbacks of this - unless under warranty, you’ll generally be responsible for maintenance and wear and tear items during your ownership, especially on an older car, and this can add to the cost…you’ll also need to pay sales tax on the purchase price upfront…and totally separate from that, your monthly payments tend to be higher with owning than with leasing.
Leasing generally works best if you’re the type of person who always wants to have a newer car every few years. If you plan to get one car and drive it forever to the ground… don’t lease your car. But depending on how long you plan to keep the car, leasing could actually save you money. With leasing, you’ll generally be leasing a brand new or newer car. You’ll usually have a down payment and then generally you’ll have a 24-36 month term where you have a fixed monthly payment, along with a set number of miles you can drive each year. You’ll need to return the car with your set amount of miles or less or risk paying fees and penalties.
Now when you lease a car, you’re not paying the full amount of sales tax upfront - which can save you a TON of money. The lease price is determined but the depreciation the car is going to see during ownership, plus some finance charges. You’re basically just paying a monthly amount of the depreciation, rather than the entire cost of the car. Therefore, with leases, you’ll generally pay LESS per month to drive the car because your financing only the deprecation…not the entire thing like when owning a car. With a lot of leases, too, maintenance is often covered…so you can pretty much just pay a set monthly price and not have to worry about normal wear and tear/maintenance costs that come up. And when the lease is done, you don’t have the hassle of needing to sell it…you just turn it back and you’re done.
So here’s my thoughts. Both leasing and owning have their own advantages and disadvantages, and what makes one better than the other is dependent on your situation. If you plan to keep your car more than 5 years or so…it’s almost always better to buy the car. Whether you buy a brand new car or an old used one, the longer you plan to keep the car, the more it starts making sense to buy it.
But if you’re like me and you want the privilege of owning a new car every few years… it’s cheaper just to lease it - it means I pay less per month since I’m only paying for the depreciation, I don’t need to pay sales tax on the entire cost of the car - only on my monthly payment, and I can simply swap it out when the lease is done to get a new one.
Ideally, for most people out there who just need a car to get from A to B…the BEST option is to buy a car that’s 3-5 years old and has already hit most of its depreciation. After about 5 years, most cars depreciate at a much, much slower pace - so buying a car like this and keeping it forever would be the most financially “sane” thing to do. Then just finance it at a low interest rate, re-invest whatever money you would’ve spent on the car, and hold it. Then when the car falls apart and you can’t drive it anymore, do it again.
For business inquiries or one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness @gmail.com
Suggested reading:
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
Your money or your life: https://goo.gl/fmlaJR
The Millionaire Real Estate Investor: https://goo.gl/sV9xtl
How to Win Friends and Influence People: https://goo.gl/1f3Meq
Think and grow rich: https://goo.gl/SSKlyu
Awaken the giant within: https://goo.gl/niIAEI
The Book on Rental Property Investing: https://goo.gl/qtJqFq
Favorite Credit Cards:
Chase Sapphire Reserve - https://goo.gl/sT68EC
American Express Platinum - https://goo.gl/C9n4e3

By Stock Chat

where the coffee is hot and so is the chat

27 thoughts on “Buying vs leasing a car 101: how to pick the best choice”
  1. Avataaar/Circle Created with python_avatars Raouf Saha says:

    why are the subtitles in vietnamese bruh

  2. Avataaar/Circle Created with python_avatars sabinj says:

    He wants you to LEASE a car because he bough a Lotus ELISE !

    Get it?

    I know it's an Exige, but hey… it's close enough.

  3. Avataaar/Circle Created with python_avatars Lurch Marcum says:

    i would think the maintenance costs on cars makes them almost never a good long term investment

  4. Avataaar/Circle Created with python_avatars Nora says:

    I want to lease a bmw idk 🤷‍♀️

  5. Avataaar/Circle Created with python_avatars Addison Tharpe says:

    Drive it until it doesn't run anymore what does that mean? That it won't start because it needs a head gasket or a starter and the starter is only 100 bucks and 100 in labor

    That's nothing

    You can literally drive a car for Infinity

  6. Avataaar/Circle Created with python_avatars Vio London says:

    super helpful 🙂

  7. Avataaar/Circle Created with python_avatars Hayden Eccles says:

    Graham, I would love some more vehicle-related videos from you! It would be highly beneficial to hear your perspective on financing vs. leasing in today’s wild car market.

  8. Avataaar/Circle Created with python_avatars Kel says:

    So these old videos is where all the real gems are hahahah

  9. Avataaar/Circle Created with python_avatars Rx mal says:

    your a genius

  10. Avataaar/Circle Created with python_avatars Ted Jerdee says:

    On a lease, If you don't use the miles you paid for, they should owe you similar to how you owe them for going over. I'm not saying cash but at least credit towards another car. When a dealership is planning on selling a car with 45k miles after a lease and it comes back with 35k, they cream their pants. I don't see why they couldn't credit those miles towards another lease or purchase even if it's 10 cents a mile

  11. Avataaar/Circle Created with python_avatars Chace Bonanno says:

    Borrow money to make an investment in a depreciating asset or just rent it? I’d choose the ladder in most cases but the money factor and residual value could make the former attractive in rare cases.

  12. Avataaar/Circle Created with python_avatars James says:

    bro talks too fast

  13. Avataaar/Circle Created with python_avatars Eric Castelazo says:

    Does his voice sound deeper?

  14. Avataaar/Circle Created with python_avatars Kadyn X William says:

    His voice is different ! How he do that lol

  15. Avataaar/Circle Created with python_avatars Frogger says:

    One more big consideration is that like in Pandemic now, people stay home and fewer commute/travel opportunities. Leasing now might not be the best option.

  16. Avataaar/Circle Created with python_avatars Hola! Cindy Reid says:

    Thank you!

  17. Avataaar/Circle Created with python_avatars Logan Keltie says:

    Why is your voice so deep in the video, buddy?;)

  18. Avataaar/Circle Created with python_avatars Caboose The Moose says:

    It is hilarious how different this video is

  19. Avataaar/Circle Created with python_avatars 유서영 says:

    The adorable cloakroom posteriorly irritate because turnip logically clean like a miniature manx. zesty, clammy stone

  20. Avataaar/Circle Created with python_avatars blue bananacookie says:

    quit your bitching about sale taxes in califonia

    in sweden we have around 25%sales tax plus extra tax for things that are bad for you and/or the Environment

  21. Avataaar/Circle Created with python_avatars K says:

    How is leasing to buy worse off than financing

  22. Avataaar/Circle Created with python_avatars Mizkimo says:

    Coming for that 23k q60 thanks graham

  23. Avataaar/Circle Created with python_avatars Michael Sumner Jr says:

    The "Hassel's" you are talking about when selling the car, is a lot easier than dealing with all of the lease rules & fees that a lot of people end up getting caught up in. The good thing is YOU hold the advantage when you own the car (even if financed). There's IS NO cost difference in Leasing vs. Buying, it's only a payment preference with rules/restrictions attached to leasing. (as long as your not bad at buying cars) Also remember when you lease a car you are BUYING a car as well, so negotiate that price if you choose to lease.

  24. Avataaar/Circle Created with python_avatars bella2019 says:

    David Ramsey would vomit on Leasing – waste of interest $

  25. Avataaar/Circle Created with python_avatars Bridger Logan says:

    I'm from MT, I lease.

  26. Avataaar/Circle Created with python_avatars Alex Wolowiecki says:

    I miss old Graham. He gets right to the point

  27. Avataaar/Circle Created with python_avatars WayzUX says:

    Here in my garage

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