Скачать или смотреть Buying Cash vs. Financing vs. Leasing a Car | Which Option is Best?

Buying Cash vs. Financing vs. Leasing a Car:

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Let's say you are ready to get a new car for whatever reason and you decide that you want a Mazda 6 sedan like the one that I purchased back in June. So if you wanted to buy that car today, brand new with the grand touring trim it would cost you right around $30,000. Now don't worry I did not buy my brand new because I would never buy a new car and we will get into that debate a little bit later but for the sake of simplicity we're looking at a $30,000 Mazda 6. So first of all if you were to buy that car in cash it would obviously cost you $30,000. Now I know there's going to be additional fees for titles and tags but let's forget about that for the sake of simplicity and say that for cash, it would cost you $30,000.

Now the alternative would be to finance that vehicle. So let's say on that 30,000 dollar vehicle you made a 20% down payment which Would be $6,000. So that means we paid $6,000 out of pocket and we were borrowing the remaining $24,000 and let's say we're borrowing that money at a 3.5% interest rate over five years or 60 months and I think those are pretty average and realistic numbers. That means that you would have a monthly payment of $437 per month and at the end of five years, you will have paid $2196.00 in interest alone meaning you literally just gave over two grand to the bank in exchange for that loan.

So obviously paying for the car in cash would mathematically be the better option but typically the argument in general for borrowing money is that you could take that money that you didn't use since you borrowed it and instead invested at a higher return then your interest rate. And this is a very common argument used for a house since for example, if you borrowed $100,000 for a house instead of paying in cash then you could invest your $100,000 and earn say an 8% return and even if you're paying a 4% interest rate on your loan, you're still coming out four percent ahead at the end of the year. However, I'm here to tell you right now that that argument is absolutely useless when it comes to vehicles and that's because real estate or a home is a fantastic investment and is actually one of the leading ways that people become millionaires in the US while a car is a depreciating asset meaning it goes down in value like really quickly.

Now you may be thinking that I completely forgot to talk about leasing a vehicle since that is after all in the title of the video but I haven't mentioned it yet for one very good reason and that is I think leasing a car is just stupid. If you're not familiar, when you lease a car you usually pay a down payment, then have a monthly payment for a given period of time just like financing a vehicle and at the end of that period of time, you typically have the option to either buy out the vehicle or just walk away from the lease and the dealership or whoever was leasing the car to you takes the car back. Now I understand that there are limited scenarios where leasing does make sense for example if you drive very very few miles because the amount you're paying for your lease is going to depend on how many miles you drive that car.

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