Saving Money: Which is Better - Buying or Leasing a Car?
Summary
TLDRThe transcript discusses the pros and cons of buying versus leasing a car. It highlights the appeal of ownership, such as having no ongoing payments after purchase and the ability to sell the car for its remaining equity. However, it also points out the downsides, including depreciation and repair costs. Leasing offers benefits like lower monthly payments, new cars every few years, and typically no repair costs during the lease term. The choice between buying and leasing depends on personal preferences, such as valuing long-term ownership or enjoying the novelty of a new car regularly.
Takeaways
- 🏎️ Buying a car means you own it outright and can enjoy the feeling of ownership once it's paid off.
- 📉 A downside of buying is the immediate depreciation of the car's value when you drive it off the lot.
- 🛠 Owning a car also means you're responsible for all repair costs after the warranty expires.
- 💰 There's an equity benefit to owning, as you can recoup some of the car's value when you sell it.
- 🚗 Leasing a car often comes with lower monthly payments and sometimes no money down, making the upfront costs lower.
- 🔧 Leased cars are usually under warranty for the entire lease, reducing repair costs.
- 🚫 With leasing, you don't own the car and are subject to mileage limits, which can incur additional costs if exceeded.
- 🆕 Leasing allows for driving a new car every few years, which appeals to those who enjoy having the latest model.
- 📈 The cost of insurance may be higher when leasing due to the need for gap insurance, which covers the difference between the car's value and the remaining lease payments in case of a total loss.
- 🤔 The decision between buying and leasing depends on personal preference, with some preferring the security of ownership and others valuing the benefits of leasing.
- 🏆 There's no universally 'better' option; it's about what suits an individual's lifestyle and financial goals.
Q & A
What is the main concern of the person considering a new car?
-The main concern is whether to buy or lease a car, as they are unfamiliar with leasing and want to make an informed decision.
What is appealing about buying a car according to the script?
-Owning the car outright is appealing because it provides a sense of ownership and financial freedom once the car is paid off.
What are some downsides of buying a car mentioned in the script?
-Downsides include immediate depreciation of the car's value once driven off the lot, the hassle of selling a car, and the responsibility for repair costs.
What is the advantage of leasing a car in terms of warranty?
-Leasing a car is attractive because the car is generally under warranty for the entire lease period, reducing repair costs.
Why might someone prefer leasing over buying?
-People might prefer leasing for the opportunity to drive a new car every few years, lower monthly payments, and often no money down.
Outlines
🚗 Car Ownership vs. Leasing: Pros and Cons
This paragraph discusses the dilemma between buying and leasing a car. It highlights the appeal of owning a car, such as the satisfaction of outright ownership and the potential for the car to 'make money' after it's paid off. However, it also points out the downsides, including depreciation, the hassle of selling a car, and the responsibility for repair costs. The paragraph also touches on the benefits of leasing, like having a car under warranty, lower monthly payments, and the opportunity to drive a new car every few years, but notes the lack of ownership and potential additional costs like exceeding mileage limits and higher insurance premiums.
🔑 Personal Preferences in Car Ownership Decisions
The second paragraph delves into the personal preferences that influence the choice between buying and leasing a car. It suggests that individuals often stick with one option for a long time, similar to the preference between coffee and tea. Some people prefer the security and long-term cost reduction of owning a car, while others enjoy the novelty and convenience of leasing, including the benefits of a warranty and lower upfront costs. The paragraph concludes that there is no universally correct choice, and it's about what suits an individual's lifestyle and preferences best.
Mindmap
Keywords
💡Car Ownership
💡Depreciation
💡Financing
💡Leasing
💡Equity
💡Repair Costs
💡Gap Insurance
💡Mileage Limit
💡Trade-In
💡Warranty
💡Personal Preference
Highlights
The appeal of owning a car outright, including the satisfaction of eventual ownership and potential for the car to 'make money' after it's paid off.
The downside of car depreciation immediately after purchase and the responsibility of owning the decreased value over time.
The hassle of selling a car person-to-person and the alternative of trading it in at a dealership for a less stressful experience.
The responsibility of repair costs when owning a car, as opposed to the potential for free repairs during a lease.
The advantage of owning a car for the equity it provides, which can be used for various purposes after selling.
The benefits of leasing a car, such as having a car under warranty for the duration of the lease and avoiding repair costs.
The opportunity to trade in a leased car every few years for a new one, satisfying those who prefer driving new cars regularly.
Lower monthly payments and typically lower upfront costs associated with leasing compared to purchasing a car.
The lack of ownership in leasing, which means not having the car's equity and the freedom to do as one wishes with it.
The potential additional costs of leasing, such as mileage limits and the associated fees for exceeding them.
The necessity of gap insurance when leasing, which covers the difference between the car's value and the remaining lease payments in case of a total loss.
The impact of leasing on insurance rates, as gap insurance can increase the cost.
The comparison of ownership and leasing costs, including upfront, repair, and insurance costs.
The non-monetary benefits of leasing, such as having a new car every few years, which can be priceless to some.
The personal preference aspect of deciding between buying and leasing, as different individuals have different priorities and lifestyles.
The conclusion that there is no right or wrong answer in choosing between buying and leasing, as it depends on personal preference.
The idea that everyone can be a winner in the decision-making process, as long as it aligns with their personal preferences and needs.
Transcripts
so Josh I need a new car I'm sick of the
one I got and I don't know whether I
should buy a car or lease a car
I've never leased a car I've always been
a purchaser but I don't really know
which one's best because here I am an
adult I need to make an informed
decision that's good so I know buying a
car because I bought cars before is
pretty cool because you own it outright
and I like owning something you know and
you know once you pay it off of the bank
it's yours it starts making you money I
feel like after it's paid off right so
is that the way to go why are you asking
me well cuz you know about this stuff
I'm kidding I know all about this stuff
are you ready yeah I can tell you Chuck
as a purchaser yeah
there is a huge draw to owning the thing
that you bought yeah like I like that
feeling right so most people have to
finance a car yeah it's not like you
walk in with like the cash in your
pocket in most cases some people do you
know people wear top hats and monocles
and stuff yeah but for most of us were
financing but once you finish paying
those making those payments you own the
car huge draw to buying for some people
yeah well there's some downsides though
like once you drive that thing off the
lot it immediately starts depreciating
in value right I mean that's a hard fact
of car ownership when you buy it you
also own the decreased value over time
yeah selling a car from person to person
ain't a lot of fun right um and that's
on you be if you're like a really
friendly kind of person who likes to
meet people through the internet you can
do it by selling a car yeah it's kind of
a hassle though a lot of people find
it's a hassle and you can make it less
hassle e if you take it into a
dealership and say you know I want to
trade this in for another car yeah but
if you really want to get every penny
you possibly can out of a sale you're
gonna want to do it yourself and yes it
is a hassle
yeah plus repair costs yeah so that's
that that's definitely something when
you own the car it's not like you can
take it somewhere and be like fix this
for me for free right they'll tell you
there's no such thing as a free lunch
yeah you might have a warranty for a
little while but if you own the car long
enough that's
run out and then it's all on you to keep
up the car you know with your pocketbook
right but again you own the car it's
yours to do what you want with and the
other really big draw to owning a car is
the equity you have in it sure when you
go to sell it whatever value is left in
that car
you get back yep right so that's yours
to keep and you can use it to go to the
track with or buy another car maybe get
something nice for your spouse sure
there's all sorts of things you can do
so there's equity yep there's ownership
and yes there are downsides to owning a
car yeah that's the buying part yeah
what about leasing now while leasing can
be attractive to certain people because
wait a minute thought you didn't know
any of this stuff well I've been only
sir's in my life okay I've gone to lunch
with a few of them that's it and they
always brag about the fact that you know
their car is generally under warranty
for the entire lease yeah so they don't
have to pay for repair costs right they
can trade it in every few years but
that's a huge one get a new car a lot of
people are really into that that's a
probably one of the biggest reasons
people lease cars is because every few
years your car starts to get a little
old ish and then BAM you have a brand
new and brand spanking new one yeah um
monthly payments on leases are usually
way less during a monthly payment on a
purchase car yeah and there's often no
money down very little or no money down
so the upfront costs are typically lower
in leasing a car sure him buying a car
yeah again though everything has a
downside
well you don't own the car right you're
basically renting it long-term yeah
sometimes your additional costs involved
like of a mileage limit if you go over
that mileage limit you're going to have
to pay per mile right so if you drive a
lot you're gonna want to maybe negotiate
a higher mileage limit or think maybe I
should just buy the car yeah
insurance is usually a lot more it's not
more just out of the gate but if you are
leasing a car you want to add something
called gap insurance gap insurance
covers you if you total your car and it
will cover the difference the gap
between what your car is worth and value
that by the insurance company and what
you still
on the lease which can be significant
sure you never want to get a car that
you're leasing without adding gap
insurance so that's going to raise your
insurance rate a little bit so where are
we we're talking about the costs of
ownership like just owning a car or
leasing a car has cost there's upfront
cost there's no upfront cost there's
repair costs there's no repair cost
insurance costs yeah there's there's
costs and benefits that you can't even
put a dollar sign on like having a new
car every few years yeah which one's
better well I think it kind of boils
down to what kind of person you are like
I've found that leasers and buyers
generally stick with that for a long
time like sort of like being a coffee
person or a tea person sure some people
really like the security of owning a car
driving it till the wheels fall off of
it and really seeing that cost amortized
go down over the years other people
really like having that shiny new car
every few years they don't mind paying
the lease they like having their repairs
taken care of so I guess it depends on
what kind of person you are okay so
there's no right or wrong answer ah
that's what I'm going with and then that
means everybody wins hey that's not bad
everybody wins
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