Buying vs. Leasing a Car (Pros and Cons)

There are 3 ways to buy a car, finance it, lease it, or buy it in cash. But leasing a car is one of the most expensive ways to own a car.

1. Buying vs Leasing
- We have to understand what goes into both of these ways to drive a car
- I'm going to compare leasing and finances a car, I’ll talk about buying cash at the end of this video
- As you probably already know, when you lease a vehicle you are renting and paying for the depreciation of the asset and rent fee, and few other fees; but when you finance your borrowing money to own he vehicle.

Leasing a Car: Pros
- When you lease a car you get a few benefits
- You get to have lower monthly payments
- You get drive a new vehicle
- And it takes the hassle out of car ownership in a way
However, leasing does come with Cons
- Drive off the lot fee ( return fee sometimes also)
- Restrictions on miles you can go
- You don’t own the car ( but you can buy it, at market price when you return it)

Now when you Buy a car and you finance it: Pros
- You're on your way to own the car
- No restrictions, it's your car
- Buying is cheaper
However the Cons with buying a Car:
- Higher monthly payment
- Depreciating asset
- It does come repair cost every now and then which could be hassle
Obviously: if we just look at this from this perspective it looks like leasing is more convenient, but its going to be more expensive because of that. And that’s why leasing is luxury.

2. Let's break down the Math of leasing vs Owning
- Now every time I say leasing has a lower monthly payment
- Your brain probably starts to say then it's cheaper
- But in reality, the monthly payment does not equal value and price
Here is an Example: Karen and Mary: they both want the same car, but one of them will buy and the other one will lease

Karen wants to drive a new vehicle
- But she can't afford those monthly payments
- So she opts in for the lease and thinks she's getting a better deal because of the lower monthly payments
- So the car both Karen and Mary want cost $30,000 dollars

Math for Karen: she is going to lease for 6 years, in those 6 years she will get 2 new cars. So basically two lease cycles: Payments are $300 a month
First 3 years: ( 36 months x 300 + $1200 drive off fee ) total cost of $12,000
Second Lease Year 3: ( 36 months x 300 + 1200 drive off fee) total cost $12,000
Total Cost of the Lease for Karen is: $24,000 in 6 years, and shes already getting ready to get her third lease.

Math for Mary:
She bought a 30k car and put down $8k and financed 22k at 3.11% over 5 years: total monthly payment of $396
First 5 years: ( 60 months x 369 + 8000 Down Payment) = $31,760 bucks
Obviously a lot more than Karen, and she drove the same car for 5 years, but in year 5 she no longer had any payments.

But her is the Truth:
- Karen doesn’t own anything, so that 24k is gone, and she’ll probably again for another 3 years and pay another 12k but mary doesn’t have to make payments anymore
- Also, mary owns an asset, so over the first 5-6 years, it lost around 50% of the value, but she can always sell it
- In this case, it looks like the lease is $7,760 bucks cheaper buck mary has 15k in value, which makes buying $7240 cheaper than leasing.

The point: when you buy a car you build equity and you can always sell it and get some money. Mary can drive for another 10 years without any payments. Karen will always have payments and never have any equity, and that’s why leasing is a luxury and that’s why it's 22% more expensive in this example in the first 6years. But after that, it'll get more and more expensive.

3. The best way to buy a car:
- Is to buy it around Year 5, and get a 50% discount
- And that slows down the depreciation
- And pay for it in cash, so make a savings goal

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[TommyBryson]

Here is a video on Driving Luxury Cars for Free

[revilsdr]

Simple terms leasing vs buying is the same as renting an apartment vs buying a home you have no equity in what you’re paying for. Some people are OK with that other people recognize that the equity can actually be used to your benefit in the long run. A lot of dealerships will get people to lease a vehicle because they cannot afford to buy it with the misconception that you can just buy it when your lease is up but the buyout price is usually way more than a vehicle is actually worth…at that point you’re usually upside down. You’re basically just renting a car and always going to be in debt.

[annettemarie]

I recently leased a car. Happy I found your channel.

[kckrox]

I own a car outright and I am currently leasing. So far so good. Do what’s right for your pockets. The reality the first 3 years you only need the most basic of maintenance after the 3rd year that’s when it goes left. Please remember if you are financing to own. You won’t “own” the car until the last payment is made. So you can still run the risk of losing the vehicle if illness or job loss occurs. So to me it feels like the same thing. Plus Every 3-4 years I was getting a new car anyway. If you aren’t the type that will drive a car until the wheel fall off I can’t see why leasing can’t be an option.

[gregorythompson]

Do you have a similar comparison with a luxury car specifically? Would be great to know if the extremely high maintenance on a luxury car changes your POV

[ASMRGRATITUDE]

Anyone have any success with purchasing a used car at an auto auction?

[sana-ifrb]

Leasing only makes sense if your self employed thru a LLc or a corp and use the vehicIe for business PURPOSE. The lease can be deducted from earnings.

[vidayfinanzas]

Lease a brand new car, many will never get to use and drive and 0 miles car in their life.As you pay less money on the lease, save a couple of thousands and at the end of the lease buy a used car and that’s It.At Least you won’t regret not having a latest year 0 miles car in your life..life ends people do what you can while you can...when we are kids we all want a new toy as adults that toy becomes a new car, a boat, a house or what ever so it’s up to you it won’t killed you to have a lease for 3 years as long as you do the math.once you done with your lease just cross the new car from your bucket list and smile ...you did it.

[PhiMobileSounds]

Keep in mind that you are also paying for the maintenance if you buy (as these things comes up), where as the maintenance is built into the Leasing process so that the dealer can maintain value of the vehicle.

[RicoCopeland]

First! Huge fan of tommy he made me start my channel!

[litzymejia]

I really appreciate that you wrote it out in the description as well. It helped me break it down.

[whoant]

Thanks i really needed this info new sub💯

[JordanWilliamsN]

got to love math! I would only lease IF i grew out of my extreme cheapness, and/or If i had a primary car and just wanted a toy

[angela]

Thank You tommy for all your informative videos!! I love how when i click to watch your videos i say with you " Hey guys, tommy bryson here and today i want to talk about..."
HAHA, so catchy. I love it!!!!

[prew_gaming]

its all about looking fresh every 3 years...lol

[merisaamen]

would you lease a car to build credit.

[devantex]

Well the money that you paid during the lease can actually be applied to buying the car if you choose so right?

[kevsalinass]

I disagree with buying a car in cash, I feel that that large capital is better off invested and it’s better to make monthly payments on a loan. Then again I get this mentality as I am a day trader and make larger returns than the average S&P 500 investor

[tajneeley]

Ya but leasing sounds better because what about repairs.

[larryford]

Is your debt to income lower on a lease since you're paying for a portion of the car for a certain term?