Should I Buy, Finance, or Lease a Car?

-- David compares buying outright, financing, and leasing a vehicle
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#pakmanfinance #car #vehicle

[coldscooter]

My city (Vancouver/Canada) has several car-sharing services which are excellent. No ownership, just pay as you use. Also one of the services (the most prominent) allows you to leave the vehicle almost anywhere (not having to return it to where you picked it up). I save so much by using these services and love them. Also a great range of different vehicle types.

[desireeedwards]

The used market has been turned so upside down, I've decided to buy new. This is particularly true when trying buy a hybrid. The hybrid I am interested in (and this pattern holds for virtually every hybrid I considered) to buy new costs about $32-34k and to buy used (1-5 years old) for the same vehicle ranged $30-36k. The decision was a no brainer. If the price is the same (and the finance terms are better for a new car) then buying new makes sense in this market.

[ChantalRussell]

I agree with your assessment here 100%. I’ve been leasing for 5 years now, and I don’t think I’ll ever go back. People fail to consider that a vehicle is a depreciating asset. Just because you own a car, doesn’t mean it has value. Plus when you factor in repairs and new tires, etc. the costs really add up over time.

[apoco_lips]

Used cars can be a very economical choice. When I am trying to see if a car model is reliable, I like to check the internet forums to see if there any issues being regularly reported on a specific model/generation. You can search on a search engine "model name" then "generation or year range" and then "issues" Like "camaro 5th gen issues." A potentially better set of key words is "high mileage" instead of "issues". That has lead me to some really informative threads where people report their mileage and any work their car needed over the length of their ownership. Read through a thread like that and you can get a reasonable idea of the potential reliability of a car. Its especially satisfying and valuable if you find a post from someone with a really high mile example that has owned it a long time, people like that can be pretty enthusiastic about their car which hopefully leads to a detailed post.

[Insightfill]

In Illinois, leasing used to be a tax rip-off. You would pay sales tax on the full sale price, and then be taxed again on the residual at lease expiration if you bought the car. If you returned the car, you were NOT refunded the extra sales tax.

That just changed recently though.

[polkadotmicrochip]

The only car worth buying is a used one. No financing, pay in full.

[malcolmjelani]

I will probably never finance a car. That's why i taught myself how to repair my vehicles, so i can buy them used.

[wellwell]

You always know what's best by getting the opposite of what the salesmen, pushes on to you and the way cars salesmen push finance, you are in no doubt that buying outright is the best for a personal car (lease better for business). I once tried to buy a car and the salesmen refused to sell it unless it was under finance, I had to go to another location to buy a car and even then it was quite hard to not get it on finance.

[Ben-ttcg]

You should talk about the mile limitation of leasing.

[psymaira]

Decided to take a look at Pakmans new content, this is amazing i like how it's detailed and easy to understand!

[I..cast..fireball]

If you have the money to buy a car cash, and can finance for a low enough interest rate, you can put the cash you didn't spend up front into the market. You will come out ahead if the market returns more than you are paying in interest. Does not always work in your favor of course, but statistically this is best option. Financing gets a bad rap when discussing people who have no other option. Those people are not getting 2.5% interest rate like I did. Leasing on the other hand has the most traps in it and is the most expensive way long term to have a car. Financing depends completely on if you are doing it because you have to or not. If you have to finance, well your stuck with it. If you don't have to finance and can invest the money not tied up in the car, and qualify for a low interest rate, its the best option.

[darkcoldwater]

On these three options I’ll take the forth where I buy the car for 14k after some sucker has already leased it. They depreciate slower after those first three years. Finance but make extra payments is fine. Haven’t had a car payment in over five years. It rules! My preowned car has excise tax of 36 dollars and 80 bucks a month to insure. I don’t know how insurance and tax work on a lease?

[Sainjl]

This is the most timely and applicable video! I’ve been thinking about this a lot and this helped me make that decision. Thank you!

[leerph]

Can you do a video on points vs cash back credit cards?

[fuerstmetternich]

I would never go into debt for a car. How insane do you have to be?

[nakfoor]

What Pakman overlooks is that by buying the sports car with 2% down, this increases peoples' perception of you, and will certainly guarantee higher future income to help pay for the car.

[jasonlongton]

Leasing is the most expensive way to have access to a car. What it comes down to is this, you are borrowing money to rent. In a lease you have the liability of accruing debt, without the ability to accrue equity. That's a very bad equation. Outside some very specific cases, like using the vehicle as a 100% business expense, leasing makes zero financial sense.

If you are in a financial position where you literally have money to burn ("What's $500 dollars a month? I won't even notice that!") they yeah, go ahead and lease. But, if you are like the vast majority of people, then leasing should be right off the table.

The best financial strategy is to buy a good used car, 5 - 10 years old, depending on make and mileage, for cash. If you are young and just starting out, finance as little of the purchase as possible and pay it off as fast as you can. From there, start saving for that next car.

A car is an asset, it has value and can be used to create more value. A monthly payment is a liability and reduces the value you receive from the underlying asset. The goal should always be to maximize assets, and minimize liabilities.

[MikeJones__Who]

Leasing is the WORST option out of the 3.
You have 0 equity at the end of the term.
The idea you have 0 maintenance cost is grossly mischaracterized. You still absolutely have maintenance costs on the car.
Youll be charged a leasing penalty for any sort of knicks, dings, normal wear and tear on the car.
In most cases you also have to keep putting down payments in for leases everytime you want to re-lease a vehicle.
If you go over mileage they take you out back and beat you with a stick (figurative).
Sure, financing sucks and there are alot of disadvantages but leasing no doubt it the worst.

[Wentaya]

If you buy a used vehicle outright, what age of vehicle is the best value? Is it better to buy a one year old car, a five year old car, or...?

[thegardencity]

Not sure I agree that Financing is worse than Buying outright, especially considering the attractive rates dealers usually offer on new cars. If you are gonna buy a new car you might as well finance it. I understand the risk of being underwater but you can always throw more money down on it to avoid that all together