Buy vs. Lease, a Detailed Discussion

[trez63]

I know we talked about this at length and I noticed that there is a TON of ignorance about buying vs leasing cars in general. So I took it upon myself to make a video with a detailed discussion on the topic that really considers everything especially here in 2019 when we're on the precipice of a big change from ICE vehicles to electric. I took into account several points such as:

• How often you want a new car
• How many miles you drive
• Brand loyalty
• The real depreciation
• Ice vs electric
• Accidents and damage
• Modifications and Upgrades
• Your tax situation
• Sales tax in your state
• A little lesson on debt

Enjoy the video and let me know your thoughts:

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[Dietruck]

I know we talked about this at length and I noticed that there is a TON of ignorance about buying vs leasing cars in general. So I took it upon myself to make a video with a detailed discussion on the topic that really considers everything especially here in 2019 when we're on the precipice of a big change from ICE vehicles to electric. I took into account several points such as:

• How often you want a new car
• How many miles you drive
• Brand loyalty
• The real depreciation
• Ice vs electric
• Accidents and damage
• Modifications and Upgrades
• Your tax situation
• Sales tax in your state
• A little lesson on debt

Enjoy the video and let me know your thoughts:

Still watching and like what you have done. I was just seating down to proof read a leasing guide that @steffen707 was putting together. I will edit add comments as I watch.

With a lease you are still financing and
paying interest on the whole 50,000. However you only have to pay 20,000 of the principal.

The bank is not giving anyone use of the 30,000 for free. Think of a lease as a loan with a balloon payment.

Interest rates are higher for leases but from what have seen it is a small difference between the two.

I am in the same boat. I am looking at a Rivian as my next buy as well. The ice vs. electric is big risk factor to think about.

Just finished the video. Well done. The only other thing I would add is some info on doing big down payments for leases. Most seem to think a big down payment on a lease is a no-no but is ok when you are financing. The truth is both have the same amount of risk. Gap only covers the financed amount in both cases. There are other insurance options that cover the use of big down payments


Again very well done.

 

[trez63]

Still watching and like what you have done. I was just seating down to proof read a leasing guide that @steffen707 was putting together. I will edit add comments as I watch.

With a lease you are still financing and
paying interest on the whole 50,000. However you only have to pay 20,000 of the principal.

The bank is not giving anyone use of the 30,000 for free. Think of a lease as a loan with a balloon payment.

Interest rates are higher for leases but from what have seen it is a small difference between the two.

I am in the same boat. I am looking at a Rivian as my next buy as well. The ice vs. electric is big risk factor to think about.

Just finished the video. Well done. The only other thing I would add is some info on doing big down payments for leases. Most seem to think a big down payment on a lease is a no-no but is ok when you are financing. The truth is both have the same amount of risk. Gap only covers the financed amount in both cases. There are other insurance options that cover the use of big down payments


Again very well done.

That's a great point about down payments on leases that I forgot to cover. I personally like a good balance. If my financial situation is good today, I like to put more money down so I can reduce the risk of stressing out over higher payments later. The other point is the tax bit I talked about. If I've had a little too much income in the year I'm leasing, I like to put a bigger amount into that year.

Another trick is a full value lease. Most people would think this is dump, but if you ritualized to zero, you can but the car for a $1 at the end, but write off the full amount on your lease as you pay it. It's far better than financing IMO because the deductions become super simple. I only would recommend that on 100% business vehicles though that you fully intend to keep.

Thanks for watching the whole thing. I can't wait for the Rivian. I think it'll give the truck market the big jolt it needs to get its shit together. Tesla has proven it doesn't have what it takes to do that.

 

[ZEN357]

I buy my vehicles. It's just my preference. I don't lease.

 

[Dietruck]

I buy my vehicles. It's just my preference. I don't lease.

There is no issue doing that.

 

[ZEN357]

There is no issue doing that.

I just always felt that leasing a vehicle is a waste of money. I have had friends who have leased vehicle and have had horror stories about it.

 

[Dietruck]

I just always felt that leasing a vehicle is a waste of money. I have had friends who have leased vehicle and have had horror stories about it.

It depends what you want. I think paying sale tax on 60000 for a car I plan on having a few years is a waste of money. I would rather paid sale tax on 20000 for a 60000 dollar car.

Leasing can be bad deals just like normal loans can be bad deals.

The point of the video was too give poeple the facts, so you can make an informed decision.

 

[WXman]

At the end of the day, if we assume the average Jeep Gladiator is $50,000, that means a 48 month term would cost over $1,100/month and a 60 month term would still cost $950/month, unless you have massive amounts of free cash to put down on the purchase.

Considering that the average U.S. household income annually is only around $55,000, there is no way in hell that the average person or family is going to walk into a dealership and buy a Jeep Wrangler, Gladiator, Grand Cherokee, etc. Ain't happnin'.

And so, for auto manufacturers these days to stay in business, they've got to find ways to keep cars moving off the lots.

So that's where long term loans come into play, right? Well the problem with those is that some people don't want to spend 8 years paying on a vehicle that's then worn out and ready to either replace or dump money into it as soon as you make the last payment.

And then there's leasing....where you get to have a new vehicle, low payment, easy to budget for each month, always under warranty, and in the case of Jeeps you very often end up with positive equity at the end of the lease.

What works for one guy doesn't work for the next, but the fact is leasing is a fantastic option for a lot of people.

 

[RIPLER]

I just always felt that leasing a vehicle is a waste of money. I have had friends who have leased vehicle and have had horror stories about it.

I have "bought" just about everyone of my vehicles with the mindset that leasing is a waste of money. The problem is I always think that I'm going to keep my current vehicle forever. but I have a bad habit of only keeping a vehicle for 2 or 3 years and have never owned a vehicle outright. My wife on the other hand doesn't have my habit and keeps her vehicles for a long time. In my case I am definitely throwing money away just in the initial sales tax, I am more than likely going to lease a Gladiator.

 

[Blown7]

All is good with leases until finally FCA figures out the JT won't have a 70 per cent plus residual after 3 years and then modifies the leases accordingly....Its comming.. get them leases while you can

 

[Dietruck]

I just always felt that leasing a vehicle is a waste of money. I have had friends who have leased vehicle and have had horror stories about it.

What are the horror stories? was it mileage?, return issues?

 

[rvillano8188]

At the end of the day, if we assume the average Jeep Gladiator is $50,000, that means a 48 month term would cost over $1,100/month and a 60 month term would still cost $950/month, unless you have massive amounts of free cash to put down on the purchase.

Considering that the average U.S. household income annually is only around $55,000, there is no way in hell that the average person or family is going to walk into a dealership and buy a Jeep Wrangler, Gladiator, Grand Cherokee, etc. Ain't happnin'.

So that's where long term loans come into play, right? Well the problem with those is that some people don't want to spend 8 years paying on a vehicle that's then worn out and ready to either replace or dump money into it as soon as you make the last payment.

And then there's leasing....where you get to have a new vehicle, low payment, easy to budget for each month, always under warranty, and in the case of Jeeps you very often end up with positive equity at the end of the lease.

What works for one guy doesn't work for the next, but the fact is leasing is a fantastic option for a lot of people.

+1. Everyone has their own opinion, but as WXMan said, what works for one guy doesn't work for the next. Hell, I live in NY, with a relatively high sales tax. paying that sales tax on a part of a vehicle I may never use is just plain dumb.
As this post says, the tricky part for me is determining whether to keep a ICE vehicle long term with all the electric options coming into play. I've forced myself into thinking that even though this is happening now, it will be years before a true affordable electric pickup is available, so I will probably be financing (for the first time in over 10 years). I've always wanted a Jeep to wrap my hands around and customize to my liking. Even with almost triple the median household income, a 50k financed truck is a lot to handle payment-wise, and before anyone says anything about buying something you can't afford, try to find me a decent daily driver pickup, optioned out, under 45k, that you'd want to own long term.
The Rivian wont be out for another year and a half at a minimum, and will cost 70k to start, meaning let's call it 80-85k. Lease or buy, that's just expensive and why buy a truck for 30k more? because it saves you some gas money? you'll never make that back and I just don't see the value. Plus, it's a brand new brand, and will have it's issues (See: Fisker)

 

[ZEN357]

What are the horror stories? was it mileage?, return issues?

I had a friend who lease a Grand Cherokee from a local dealership. He put a new set of tire on it before returning it, but since they weren't the same brand tires that were on the vehicle when he leased it he had to pay for another set. They nailed him for every chip and ding from normal driving on it. And since he turned the Jeep in three months early but paid for the entire lease they dinged his credit report with a negative mark. He was really angry. The only reason he turned the Jeep in early was because his Grand Father gave him a vehicle he had because he couldn't drive anymore.

 

[Dietruck]

I had a friend who lease a Grand Cherokee from a local dealership. He put a new set of tire on it before returning it, but since they weren't the same brand tires that were on the vehicle when he leased it he had to pay for another set. They nailed him for every chip and ding from normal driving on it. And since he turned the Jeep in three months early but paid for the entire lease they dinged his credit report with a negative mark. He was really angry. The only reason he turned the Jeep in early was because his Grand Father gave him a vehicle he had because he couldn't drive anymore.

Interesting. Good to know. I knew about the tire thing. My brother had to keep runflats on his bwm for the same reason.
Chips and dings are spelled out it the leasing paperwork. Both by size and how many. Touch-up piant is allowed to be used to filling the chips as well.

I don't get the credit report ding.

Thank you for the information. More stuff to watch out for.

 

[ZEN357]

Interesting. Good to know. I knew about the tire thing. My brother had to keep runflats on his bwm for the same reason.
Chips and dings are spelled out it the leasing paperwork. Both by size and how many. Touch-up piant is allowed to be used to filling the chips as well.

I don't get the credit report ding.

Thank you for the information. More stuff to watch out for.

Now my Sister leases her vehicles from a Mazda dealer that she has been doing business with for years. She normally signs a three years lease knowing they will call her in two years and want the vehicle back to sell as a pre-owned because she takes good care of her vehicles and the dealership does all the service work to it. So for her it works out to her advantage, they put her in a new vehicle every two years with a low monthly payment. It works for her because she has a great relationship with the dealership but she also lives in a huge city where they can move vehicles fairly quickly. I live in a small town area where that isn't the case, so I always buy my vehicles and run my daily driver until it is pretty much at it's end of life. For some people leasing works, just not for me. Maybe if I lived in a bigger city and had the relationship with a dealership that my sister has I would lease a vehicle. One thing to note, my sister is a lawyer and she goes through the leasing agreement with a fine tooth comb before she signs and has them take out anything that she does not like and they actually do it.

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