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Buying VS leasing a car - Which is the better option ? ( Don't get ripped off)

[Applause]

should I buy my car or should I lease it

that's a question that I get a lot so in

today's video we're going to cover the

pros and cons buying versus leasing and

hopefully at the end of the video you'll

know which option is best for you now

most people are familiar with buying a

car meaning you finance you finance it

for a certain amount of years the most

common are sixty months and 72 months

five and six years it's a lot easier to

understand financing let's say this car

is $30,000

you finance it for five years to add the

tax rate for your state or county and

add the titling fees on there you divide

it by five years and that's your monthly

payment plus whatever interest rate that

you qualify for at the time of purchase

let's get more and more common nowadays

though is that people lease their car

that's what I do now I prefer leasing

because I like getting a new car every

two or three years my lease is a 36

month lease you can also pick a 24 month

lease those are the two most common

terms for leasing now people that lease

the most of the time know sort of how

many miles they drive per year the most

common is ten thousand miles per year

12,000 miles or $15,000 however what

matters is how many miles you have at

the end of the lease term so my car is a

36 month lease I have a 15,000 miles per

year lease in the full three years that

I have my car I can drive 45,000 miles

so it doesn't really matter how many

miles you drive the first second or

third year per se like I could drive

25,000 miles my first year but then I

have 20,000 miles left for the remaining

two years the most common thing that I

was told during my time of selling cars

regarding leasing and why people didn't

want to do it is because they feel like

they don't own the car they're only

renting it if you finance a car for five

or six years you do not own that car

until it's paid off the bank is the one

who holds title for your vehicle until

you've paid it off

with leasing it's a little different you

choose how long you want to have the car

and also the distance that you'll be

able to drive during the time that you

have it when the lease is over you

either return the car to the dealership

free and clear now if you like the car

enough you have the option of buying it

at the end of the lease so when should

you be buying your car meaning you

finance the car if you're looking at

keeping your car for over five years at

least

buying is definitely the way to go one

thing I've noticed is that when people

buy their car meaning they finance it

they come back after two or three years

and they want a brand new car again they

want to trade in the car they've had for

a new one now the problem with that is

that as we all know cars depreciate like

crazy

it is not a good investment and there's

many factors for white cars appreciate a

lot like my car here a Ford Fusion for

instance is very saturated on the market

it's a great car I love it but it's very

popular with rental companies meaning

that the market is flooded it's all over

the place second-hand value for these

cars are horrible and it's sadly the

fact with most brands today so if you're

looking to trade your car in after two

or three years on a six-year loan you're

most likely going to be upside down on

your loan meaning you owe more than the

car is worth because the car has

depreciated so much unless you've put a

considerable amount down at the time of

purchase that it's most likely the

scenario that you will face when you

want to trade your car in that's why I

choose to lease I love having a new car

every two or three years at the end of

the lease I can just return it to the

dealership free and clear I had to get a

new car just say bye-bye I'm going to

another brand or whatever yes it is true

that I don't really hold any equity in

my car I can't trade it in and use that

as money down for a new car and lower my

payment that way but on the other hand a

lease payment is usually lower than a

financing payment because when you

finance your car you finance them the

full amount of the car

$30,000 now when you're leasing a car

you only have it for two or three years

so you're only making payments on a

lesser amount of the vehicle that's why

usually at least payment is lower

financing payment so with people that

trade a car in after 2 or 3 years when

it's financed they've pretty much done

the same as leasing the car although

they've had a higher payment the whole

time so if you know that you're going to

keep a car for a long period of time

financing definitely the way to go if

you get to the point where you've

actually paid the car off the bank sends

you the title you own the car and you

hold equity in that vehicle

now some cons regarding leasing as I

mentioned earlier at the time of

purchase or at the time of lease you

pick a certain amount of miles that

you're going to be driving during that

lease term if at the end of the leads

you are above that mileage there will be

a penalty fee and that penalty fee is

most commonly 20 to 25 cents per mile so

let's say you are a thousand miles over

on your lease that's $200 that's going

to be coming out of your pocket to cover

for that mileage and having at least

some times I mean if you start driving a

lot maybe your work situation has

changed you get employment in a

different city and your commute is a lot

longer than it was at the time of

leasing the car you can get that worried

feeling oh my god am I going to go over

my mileage and how is this going to work

out and I'm had that a couple times and

it's not fun I still choose to lease

though I picked a 15,000 miles per year

lease although I knew I wasn't going to

be driving 15,000 miles per year more

likely like 12,000 so I do have that

nice little buffer to the mileage I've

had the car now for two years and I have

27,000 miles on this car so by the end

of next year

I can't surpass 45,000 miles I mean

unless I drive back and forth to Miami

like 15 times the coming year here which

I won't do then it's not going to be an

issue for me

so the summarize here if you're

financing your car you are borrowing it

from the bank you don't actually own it

like most people think they do if you're

leasing your car then yes technically

you are renting the car for the time

that you have it but if you look at the

fact of the matter it's not really that

different now as an example I once had a

customer he bought a brand new escape

cat

two years later you came back to trade

that escape in for a brand new one and

buy cash and I was arguing with him and

I said why aren't you leasing you're

losing tons of money because your car

depreciates and he only put like 15,000

miles on the car in those two years but

he definitely wanted to buy his car he

won the trader he didn't care that he

was losing money because yes in fact he

was owning his cars because he was

buying them cash but he was also losing

a lot of money so to me that doesn't

really make a lot of sense to lose a lot

of money just to feel that you're owning

the car because he did this on a regular

basis always traded his car in every two

years lost a lot of money bought a new

car cash some people don't care about

that for me that would never work that

is why at least because I know that I

want a new car in two or three years I'm

not the type to keep them for very very

long on the other hand some people they

buy one car every ten or fifteen years

of course you need to buy your car make

the payments or pay cash upfront

whatever it is you choose to do and then

you actually own the car I mean it's a

no-brainer of course you would purchase

your cars I mean at least would not even

be an option at that point now in this

video we were obviously talking about

brand new cars leasing only really an

option if you're looking at a brand new

car in my experience you haven't been

able to lease a used car ever although

I've heard that that is possible I don't

really know how that works I can't

really speak on it now buying a car it

goes for that saying if you find a used

one let's take my Ford Fusion as an

example here if you buy one of these

that is one year old you could save up

to fifteen to twenty thousand dollars

off the sticker price now if you're okay

with something like that it'll still

have a lot of factory warranty on the

car depending on how many miles the

initial owner put on it you don't

finance as big of an amount meaning you

save a lot of money now with leasing one

good thing is that let's say you pick a

12,000 mile per year lease my car has a

three year or 36,000 mile bumper to

bumper warranty on it if you have a

12,000 miles per year lease 36,000 miles

for the full lease term

you're always covered under warranty now

also if you drive a car in a normal

fashion you might even get away with not

having to put tires or brakes and rotors

wear and tear items like that during the

full lease term as well some

manufacturers even offer free service

for the full lease term so if you find a

car a good lease deal free service for

the full lease term you have a lower

payment because it is a lease that's a

pro regarding leasing and that is why I

do it now with a lease there's always a

residual value of the car that should be

presented to you at the time of

negotiating for the car now the most

common residual value on a lease is

around 50 to 55 percent the higher the

residual value is the lower your monthly

payments is going to be although if you

have a high residual value to buy out at

the end of the lease if you're

interested in purchasing the vehicle

outright is going to be a lot higher so

that is not something that I would

recommend to buy a car outright at the

end of the lease if your residual was

very high now if you have a low residual

your monthly payment is going to be

higher but at the end of the lease it's

going to cost you a lot less to buy that

car outright so it all really comes down

to what you prefer with me I would

obviously want to have a very high

residual let's say up to 65% that does

happen depending on car manufacturer and

the market at that time because you have

a very low lease payment during the time

that you're leasing it I'm never really

interested in buying the car outright at

the end of the lease because I want

something else now let's quickly talk

about some things that I learned during

my time as a car salesman if you go to

the dealership let's say you're looking

to buy a car financing one thing that

you should bring with you if you don't

have just a regular calculator download

an app like a payment calculator for car

financing when the salesperson is

quoting you to finance numbers and the

interest rate that you will be getting

take out your payment calculator work

the numbers with tax and fees and

everything that they've laid out for you

make sure that they're not bluffing you

on the interest rate some dealerships

like to inflate the interest rate in the

payment hoping that the customer

themselves will not double check

to see that the interest rate is

actually correct and in turn they make

more money with the least if a

dealership is quoting you a lease number

let's say it's a 36 month lease 12,000

miles per year and they're quoting you

let's say 290 dollars make sure that

they're quoting you that monthly payment

with tax included the dealership that I

used to work for we always did that some

dealerships though they'll quote the

customer a monthly payment number

excluding tax when the customer gets in

the business office to sign papers and

actually be able to drive off in their

new car the business manager is showing

them the payment with tax customer gets

mad walks out you lose the deal it never

works but some dealerships still insist

on doing it that way so make sure that

you double check that the payment that

you're being quoted is including tax and

with the lease what you should keep in

mind is that most people just like with

financing put a certain amount of money

down to keep the payment lower if your

car is totaled during the time that

you're leasing it if you have gap

insurance that will obviously cover your

loan whatever you want it however if you

put any money down on your lease let's

say you put $5,000 down that money is

all gone you will never get that back so

that is something that you need to keep

in mind regarding leasing whatever money

you put down time of signing for your

new car the car is totaled that money is

gone so I hope you guys enjoyed this

video and it was informative I whether

buying a new car or leasing it is best

for you that's your decision

hopefully I could help out somewhat in

your future decision if you're bumping

into the channel for the first time

through this video and you haven't

already please subscribe and I'll see

you next time bye bye

more familiar with buying a car meaning

you finances

it's a lot easier to understand

financing let's say this car