ACCOUNTANT EXPLAINS Should You Buy, Finance or Lease a New Car

After watching your video I got to thinking that maybe the Leasing option is actually what the dealers are wanting to push now, because they get to keep and resell (and price themselves) the vehicles, so this drives they win on both sides. Does it make sense to you?

I heard on another video that when you lease, you do NOT pay for all the taxes, and you only pay for the contracted lease amount. That means that $5196 for taxes and fees wouldn't be the same for leasing versus buying. Making your calculation inaccurate. Can anybody with experience pitch in?

Resale, private, or commercial?

The more miles on a vehicle generally the less its worth. It comes down to buying a car either for cash or financing for personal use and leasing if you use the vehicle for business.

Always have been paying cash for my cars and yes, most of them are not top trims luxury cars, ALL are Toyotas....🤣

Financial implication is not the only, or even the core consideration of buying, financing or leasing a car. All cars are different and its value depreciate differently. The brand, durability, liability, maintenance cost and enjoyment are all contributing factors. These all affect the decision of whether to buy upfront or lease. Sorry to say, but you have over simplified this topic.

Thank you. It makes sense.

There’s no scenario that it makes sense to lease a car. If you’re low or middle class, it’s the most expensive way to drive. If you’re upper class, pay cash and save on interest.

It's pretty simple, leasing is never financially better but it will allow you buy more car than you can afford.
You always pay more interest with a lease so the the bank will always make more money from a lease. For a consumer, the one exception that makes a lease financially better is when your cost of capital is higher than the interest rate of the lease during most of the term.
There's not need for a detailed excel sheet and a 15 minute video to figure this out, but I guess you accountant has to do what an accountant does best,

If just to flip numbers to determine which options to go with when purchasing a vehicle, your video is great; unfortunately, you used "New Car" purchase as your example in the video, you need to be much more dynamic than just flipping those number to compare then determine which payment method... Quite often, through doing home work and negotiations, a new vehicle's price can be worked out to a point where you don't need to finance or lease (if those who desire to replace his/her car every few years for the convenience); even when purchased a new car with cash, if kept the car in supreme condition then resell it at the right time to the right buyer, he/she may even get all the depreciation back - I am speaking with personal experience. 😉

I started to watch this video because it is so practically helpful but end up being watching you so cute😂

HI, 18KM/YEAR??? - I think most people drive more per day :-)

Madam who is leasing for 500$a month, it’s at least 1000$ a month…

What causes the opportunity cost for cash?

This made my head hurt 😮

Never lease a car.

Wow! This 1080p compression ratio is fantastic.

America chose to privatized the cost of mobility and lined the pockets of automakers and oil corps for a century. What a backwards country. We need more transit options: rail, bike/pedestrian infrastructure and mixed zoning.

I don't buy new car , I buy cars under 4,0000 miles and paying cash . I don't have car payments for almost thirty years and have no mortgage before retired . Now I have to taken care of my five rental properties !

Being Asian makes her more reliable

Love it!!!!!!!!!!!

What about tax breaks on leased cars?? Any thoughts?

nothing impresses me more than someone who's good with numbers. 😻😻😻 just make sure nobody buys a Jeep. Thanks!

I don't get the "opportunity" cost inclusion in the cash purchase. Who cares what you could have done with the money instead if you hadn't purcahsed it for cash? The whole point of cash purchase is to not have any payments, wether purchase or lease. Seems like an artificial construct to me.

need to take into account the opportunity cost of the 5k deposit in the second scenario

Lots of value in this video. Thank you so much!! 🙏

$300/mth for insurance, maintenance, fuel and parking is very low for most Canadians. Gas prices alone on a very fuel efficient car model will be $300-400/mth.

It’s very simple. You want to drive a nice it’s going cost you every month. You wanna drive a shit (ish) car it’s not gonna cost you.

Main rule is to try our very best to live within our means.

Getting a new car are so expensive these days just use public transport😮

Despite so many people telling me that leasing is a bad option when I was younger, I've always leased because avoiding car troubles/repairs is at the top of my priority list. I don't have a tolerance for dealing with bringing a car into the shop, getting a loaner, any of that crap. I just want to get in and go, not worry about any of the crap that comes later with older vehicles. I understand this sounds like I just don't want to maintain a car and I guess that's correct, and the market gives people like me an option that suits my needs. I guess we all just have to know what we prioritize!

Can you please do this but using a line of credit? Buying the car outright using the line of credit and then making monthly payments.

🔴🔴 THANKS ! you would love vintners daughter ESSENCE 🏆

I'd like to see a more realistic comparison based on monthly budget. Say $500 or $600 dollars a month. Also, the value of the vehicle at the end of the lease is negotiated at the start of the lease. Some people got real lucky when their buyout came up for option when rates were low and used prices were high.

Tissot is a wonderful watch but that Bulova though. My collection is aching for one

FOURTH choice :
Buy a good "Previously Owned" (a/k/a..used)
vehicle and let the foolish suckers take the huge depreciation. Save many, many thousands of $$$$$

1.99% is not available anywhere in Europe, in fact nowhere near.

100% agree , totally

Opportunity cost is closer to 10% based on the average returns of the S&P 500.

Your best choice is to buy a later model, moderately priced used vehicle that has a verifiable reputation for reliability and low cost of ownership. Never purchase new. Never purchase a car you cannot pay off in thee years or less. This comes to you from a CPA who spent his career as a federal bank examiner with a capital markets specialty, then spent the last ten years of his career as a financial analyst for the same federal government agency.

Opportunity Cost only applies if you take the entire car value and lock it into a GIC for the same period of time. Which virtually no one does.

If the second example has a lower resale value, the higher the monthly payment will be. The term of the lease (36 months) is to pay the difference between total cost less residual value estimation) plus interest. So, if the residual value is less, there's more pricinpal to pay in the 36 months.

Buying a Jeep is wasting your money to start.

The resale value for an individual trying to sell it themselves, or trading in is far lower than what you see dealers asking.

Better advice. Buy what you can afford. If you need to finance or lease then live your wage and hold off till you have saved enough and can make that purchase with money put aside for emergencies. People don’t listen 🤷🏾‍♂️

Leasing only makes sense if you drive under the mileage annual amount allotted by the lease. Usually that's anywhere between 10000 and 12000 per year annually. You can pay extra for extra mileage. You have the option of buying it at value at the end of the lease or getting another vehicle. In general, unless you limit how much you drive then you should buy or finance if you can afford the monthly payments.

I finance all my cars, zero down. I buy based on what I want and their weight for tax benefits. Bentleys, Large heavy Mercedes SUV’s, etc. I enjoy them and write them off. It was easier and fun to focus on how or what i can do to earn more and afford what I want than focus on how to save and pay less money per month. Plus it’s motivating and enjoyable to drive what you really like. In my opinion.

You neglect that a down payment also comes with opportunity cost just the same as purchasing outright does. No big difference but wanted to mention.

I always buy, cash only. But I keep the car for 10+ years, or until the yearly maintenence is equal to maintenence of a new car.
Once it starts braking down to exceed the cost of maintaining a new one, I start looking for a new one.
Currently my car is 14 years old and still running like a champ, no problems whatsoever, so a new one is still not even an idea 😂.
I'd say I got my money's worth out of it.

Gabrielle, great channel! In the future, could you do a cost comparison between owning a car vs taking an Uber/ride share?

Great video! It would be nice to make an update to this video for 2023 and current rates. I would think buying cash wins out right these days no?