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

Gabrielle Talks Money 37



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If you are in the market for a car – you probably asked yourself whether buying vs. leasing is the best option. Or more importantly, what is the best option where you can really get the biggest bang for your buck? In this video, we are going to go over the three main ways to purchase a car, the cheapest option, and as well as important considerations you should know. So, let’s get right into it!

00:00 Intro
00:33 Main Options
01:32 Cheapest Option (Calculations)
11:09 Other Considerations
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Gabrielle is a CPA and Tax Expert, as well as the founder of Balance + Wealth CPA, a licensed CPA firm that specializes in Tax. Prior to starting her business, worked as a Tax Manager at one of the Big 4 Accounting Firms for 7+ years, working with Fortune 500 companies. Gabrielle posts weekly videos on personal finance, business finance, and tax tips.
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Disclaimer: Note this video is not financial nor accounting/tax advice and should be used for entertainment purposes only. Consult with your own financial advisor, accountant and/or tax advisor for specific advice related to your business situation and needs.

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37 comments
@minzhu9528

any not full cash purchase is more expensive except you acn guarantee over 15% annual income to offset the cost of financing.

@endercozy9578

Never put down money on leased cars, because your not getting that money back(giving free money to the dealership). Also, never buy add-ons on leased cars like extra set of rims, nice mats, visors, towing amenities(if you really need it). While financing a car only put down if interest is higher than 4%. Yes, you can load up with the add-ons. Hope this helps.

@jackofalldenton4347

IMO financing the cheapest nicest car possible is the best way to go. Cars are bad business period. They lose way way way too much value over time. IMO the 2nd best option is to lease if you’re not gonna keep up with maintenance. Keeping a car 7 to 10 years sounds great on paper but today’s cars are so complex that repairs are very costly. So if you factor in maintenance costs then leasing is the clear winner as you won’t have any maintenance costs because the car will be under warranty essentially the entire time of possession. So maybe 🤔 leasing is the best option across the board.

@kdub175

7:20 actually, the higher the residual value the lower the payment. Lease programs are factored by how much depreciation is expected. You may run in to the lease buyout being higher than the actual value you can get selling it, but the amount you save by getting to drive more value for less money spent is a W. Equity is a bonus. A MSRP with a 65% residual will be cheaper than one with 50%. Now depending how much you can get taken off for your out the door price from one car to the next makes a big difference too. Based off my learnings, higher residual rate is always good. Whether one is keeping a new car 8+ years is the only question you need for deciding between leasing and buying.
The person leasing will have had 3 new cars in the time the buyer still has the same one, and paid less money.
Year 8 is when the buyer cleans house though.
$40k leasing at 1.25% = $500/mo
vs
$40k buying on avg 2%= $800/mo
do the math, plus bonus savings on never needing breaks or tires, unless there’s unfortunate hazard/accident.

@kdub175

Deshone said it best, first answer the most important question, “am I going to keep this car for at least 8 years?”
Yes? Buy
No? Lease.
(but good value leases only. 3 years.
monthly payments less than 1.5% of MSRP, shoot for 1.25%)
find the cars you want first, go look & test drive, never sit at the desk and talk numbers during that phase…this is the fun “finding what I want, then when you decide, you can reach out to 25+ dealers through email from home and get quotes and the best deal wins, don’t just shop local, cast the net far, 80% dealers see where your zip is and they take advantage of close & convenient . if you’re saving thousands, it’s worth the drive…
Always start at 3 years (NEVER 4 years)
$0 down (first payment only)
12k miles, but know your milage needs,
once out the door price on car is agreed, you can add the miles on, up to 30k miles available iirc. much cheaper to get the right amount of miles in the deal, penalties are astronomical
$40,000 MSRP
1% is $400 a month.
1.25% $500 a month.
1.5% $600 a month.
then always do an equity assessment during the last months of your lease.
Call bank, get the buyout amount, ask if there’s a 3rd party restriction.
Depending whether you have a restriction or not, if you do, call the qualified dealers and talk to the used car sales manager, can email too, and get bids on what they will pay you for the car, see how those numbers compare to the buyout…
if no restrictions, then get bids from the 6 most popular online marketplaces.
dont “trade in”
buying and selling are 2 separate processes and should never be mixed.
get agreed price for each item individually. then you can choose to put any equity down to lower payment or put it in your pocket. remember, any money down will be lost if the car is stolen and unrecoverable, or totaled in accident. assess your risk for these factors.

@alexrbh9515

lol, you should swich finance and lease numbers

@billyrock8305

Be an owner not a loaner.

Buy a used Toyota or Honda. Maximum budget $20,000.

18KM? Why not walk or cycle?