Buying vs Leasing A Car: Which Is Better? (2020).

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Should you lease or buy a car? This video compares the two using a simple example of a 2020 Honda Civic with a MSRP of $20650. I also go over the Pros and Cons of both Leasing and Buying a Car.

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Leasing vs buying a car comes down to a few situational differences. In today's interest rate climate (low interest rates), there are many lease deals and specials on loans going on, so with the scenario in the video, leasing is technically the same cost after 3 years in the example. However, typically ownership is slightly favored over leasing in most 3 year scenarios.

Leasing makes sense if you are looking to drive a new car every 3 years or so. If this is the case, you're better off leasing, compared to buying and trading the overwhelming majority of the time!

The best advantages of leasing is that you don't have to worry about the resale value of the car, you know your ownership costs, and your responsibility is to just not trash the car and to keep it maintained and serviceable. Also you need to know how many miles you're going to use during your lease.

Buying a 3 year old used car with low mileage is probably the best optimization for your wallet. If you can achieve this, most of the depreciation has been chipped away and now you can get a pretty good deal.

Pros for Leasing Include the following:
- Low Down Payment (or none)
- Low Monthly Payments
- Warranty Coverage
- Can write off lease payments in certain situations (business owners)

Some Cons Include:
- Mileage limits
- Not your own car
- Wear and tear fees

Pros for Buying Include:
- It's yours
- Drive as much as you want
- Ability to customize
- Ability to sell it at anytime

Cons for Buying Include:
- Maintenance, you'll be on your own
- Large down payment
- Larger finance payments - might be difficult if your income isn't high enough

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My name is Humphrey Yang, I make personal finance videos on YouTube, and TikTok where I have 550k+ followers! Make sure to sub to me on YouTube for two videos a week.

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Disclaimer: I am not a financial advisor, any investment commentary are my opinions only. Some of the products and services that appear on this channel are from companies that I have an affiliate relationship with, such as Robinhood, for which I recieve a small percentage made via those links, but it doesn’t cost you anything extra!

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Humphrey, seriously thank you for these videos !! I honestly wished I had you as teacher but seeing your tik toks and youtube really enlightening me and help me out as a college student!

alantristam

Thank you Sir, learned a lot as i am planning on getting a car

COPRESTV

This video is super informative, however, it’s important to mention that if you buy out the car after leasing, you might have to finance that amount and pay interest on that loan, therefore making total amount higher than what you calculated it to be.

LillsB

Wow this video cleared so much on my head, thank you man!

arko

Topic suggestion. What is the fastest way to pay down debt? Im $20000 in debt but want to purchase a home and can't imagine how I will get debt down quickly.

jeanieb

Thank you very much Humphrey! Could you do a video on rent vs buying a house/apartment? When should you buy a house or any tips on how you could finance your rents efficiently.

MrPiggy

You can also sell your leased vehicle at any time, just add your residual plus your remaining payments.

AlexRuiz-dkcb

When you Buy you have to pay Taxes for the full amount and that is a huge factor. Couple thousand dollars. Also, when you lease you can sell at any point.

BYU

Hey Humphrey, thanks for the great vid. Can you possibly do a detailed video on just leasing. The variables and the math involved. Thanks!!

gladiatorjai

If Buying New Always Lease, always take the lowest miles and just sell the car to a third party a couple months before the lease expires. The miles won’t matter. If you personalized the car it also won’t matter. It’s only an issue if you excede miles if you returned it. Walk into any New car dealership that’s why most the people there lease. No sales Tax, newer car, lowest payment.

BYU

Hey man! Great video thanks! My girlfriend just leased a 2020 Lexus and I’ve been very uneasy about it but your video helped me not feel so bad about it. But still think that the lease wasn’t a good idea.

MrJgomez

Hey Humphrey I did a lease buyout on my Honda Accord and you do have to pay taxes on the residual value which then makes the total cost more than purchasing. I calculated both scenarios with taxes and buying out my lease cost me over $700 more which is not too bad for having the option to return my car at the end of lease term if needed to be.

anabelhernandez

Topic Suggestion... smart college (financial aid) spending and overall college money advice

alantristam

Hey Humphrey!

Could you also do a video on RENTING a home vs BUYING a home? And i have a question i'd like addressed if you possibly can cuz i can't find an answer on other youtube videos i've seen.

There seems to be pros and cons to renting a house vs buying a house. In a scenario where the house being rented VS bought had the same value, buying a house would be good since you now have an asset called a house once you pay it off after like 30 years. But renting would be good since you'll have money left if you used left over money well for investment.

But my question is:

if you BOUGHT a house (paid mortgage for over, let's just say, 30 years), you now have a house you live in when you're retired and really old. You can live there til you're like 95 and die in your bed.

If you've been RENTING a house (for 30 years while using left over money to invest), you still don't have a house you live in when you're retired and really old. So if you've been renting, with the money you earned from investing, are you now going to buy a small house to live in until you die? do you use that money to enter a senior living facility? What's the aftermath for renters? With all that money you made from investment, do you now use that to continue renting a small house until you die in your bed when you're like 90?

That's the part i can't imagine for those who have rented instead of buying a house; the aftermath of the 'renting scenario' when you're now really really old.

peterkim

Hey Humphrey, could you do a video on how to be self-sufficient on passive income? I currently work an hourly job and would love to learn how to be my own boss and not have to clock in under someone else’s clock

CloverHunting