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Plus when you're in family mode and not a independent bachelor these cost don't seem high at all. If your woman and you make atleast 75K together which is only like 35K separately then it becomes much easier to do certain things.
NTers who lease their whips? Vol: new whip every 3 years
Plus when you're in family mode and not a independent bachelor these cost don't seem high at all. If your woman and you make atleast 75K together which is only like 35K separately then it becomes much easier to do certain things.
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Explain How A Car Lease Works
QUESTION: Listener asks Dave to break down the mathematical flaws in a car lease.
ANSWER: A car fleece is basically renting a car. You pay $400 a month and at the end of the new car lease, you turn it back in. If you want to buy it, you are buying it for what they estimate at the beginning of the fleece to be the market value. At the end of the lease, it’s called the residual value. If you pay $400 a month for 60 months, you pay $24,000 before turning it in. The car will not have gone down in value more than that, because the car companies would lose money if it did. When they get the car back, you will have paid them more than the car has depreciated during that time.
During that time, you’re maintaining the car as if you owned it. You’ll get charged for excessive wear and tear, or if you put too many miles on it. If you rent it for $24,000 and it went down $15,000 in value, then it cost me $9,000 to rent this car for this period of time. That is their profit during that time.
Another thing is that the interest rates on a vehicle lease are not disclosed because the Federal Trade Commission has determined that this is not a debt, so there is no federal disclosure involved. Therefore, you have no truth in lending disclosure sheet. The interest rates you get charged are unbelievably high. That’s where you’ll realize you got screwed over.
People get sold automobile leases because they are told that it’s what sophisticated people do. But as it turns out, the car companies make more money on leasing you the car than if you bought the car with cash, according to the National Auto Dealers Association. Broke people think ‘how much down and how much a month’. Rich people think ‘how much’. If you can’t pay cash for a car, then ride a bicycle. But don’t lease a car.
QUESTION: Listener asks Dave to break down the mathematical flaws in a car lease.
ANSWER: A car fleece is basically renting a car. You pay $400 a month and at the end of the new car lease, you turn it back in. If you want to buy it, you are buying it for what they estimate at the beginning of the fleece to be the market value. At the end of the lease, it’s called the residual value. If you pay $400 a month for 60 months, you pay $24,000 before turning it in. The car will not have gone down in value more than that, because the car companies would lose money if it did. When they get the car back, you will have paid them more than the car has depreciated during that time.
During that time, you’re maintaining the car as if you owned it. You’ll get charged for excessive wear and tear, or if you put too many miles on it. If you rent it for $24,000 and it went down $15,000 in value, then it cost me $9,000 to rent this car for this period of time. That is their profit during that time.
Another thing is that the interest rates on a vehicle lease are not disclosed because the Federal Trade Commission has determined that this is not a debt, so there is no federal disclosure involved. Therefore, you have no truth in lending disclosure sheet. The interest rates you get charged are unbelievably high. That’s where you’ll realize you got screwed over.
People get sold automobile leases because they are told that it’s what sophisticated people do. But as it turns out, the car companies make more money on leasing you the car than if you bought the car with cash, according to the National Auto Dealers Association. Broke people think ‘how much down and how much a month’. Rich people think ‘how much’. If you can’t pay cash for a car, then ride a bicycle. But don’t lease a car.
fontaine
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As a finance person... I don't think paying $25k for a vehicle straight cash homey makes sense, especially if you have good credit and can get a stupid low interest rate...
I contend that you can take that $25k... And use the stock market to your advantage...
Hell, you can drop it in a mutual fund and pull it out every year, set it in an account and auto withdraw...
I completely disagree with buying a car cash, especially one over 20k if you can get a nice interest rate
I contend that you can take that $25k... And use the stock market to your advantage...
Hell, you can drop it in a mutual fund and pull it out every year, set it in an account and auto withdraw...
I completely disagree with buying a car cash, especially one over 20k if you can get a nice interest rate
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I disregarded this advice after he suggested a 5 year lease. Where the hell are they doing 5 yr leases at?
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im doing the numbers on the same exact brand new Impala going of MSRP.
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$400/Mo for 36 months.
$14,400 + $1000 (+/-$1000) down + tax = ~$16,000
In that model the car depreciated by $15,000 over 5 years let's just say $3000/Yr depreciation. (Ease sake)
$16,000 - $3000(x3) = $5,000
They still making money plair. And some cars hold their value better.
$14,400 + $1000 (+/-$1000) down + tax = ~$16,000
In that model the car depreciated by $15,000 over 5 years let's just say $3000/Yr depreciation. (Ease sake)
$16,000 - $3000(x3) = $5,000
They still making money plair. And some cars hold their value better.
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I can understand the board aspects but your finance judgment is very questionable.
On this case I rather but the vehicle and if after 3 or 4 years im board sell it. Im not about to pay 14.5 almost half ofnthe vehicle to give it back when I can just keep it 1 or two more years and pay it off. If im board by then. Repeat and you still have that vehicleas a bargaining tool if anything.
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What you call financial judgement I call play money, honestly. The reason I lease has nothing to do with money. If you're bored you rather sell your car for less money then you purchased it for, I rather bring it back to the dealer and walk out with a new one. It's just called having different wants and necessities.
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This is one of most accurate statements I have seen post in here, well done sir
As a finance guy myself, he his absolute correct
It is called the Time Value of Money (TVM)-- in lay terms, "a dollar today is worth more that a dollar tomorrow" and also Opportunity Cost-- what alternate investment your giving up buy using the capital in another manner
So as Fontaine said, if you could take $25K and invest it at a rate higher than your interest plus inflation then it would not be beneficial for you to buy it out right cash because your leaving money on table and so alternatively if you can not properly invest that cash in that manner then it could be beneficial for you to buy it out right cash if you feel more comfortable doing that.
Since most persons fall into this second category, most are not thinking about investing that cash and realizing the gains.
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How great is owning a car after having had it for 5 yrs anyways? I don't get people automatically assuming a lease is a bad idea. As with any choice there are variables, stop making it NT black and white. I did always think it was silly dropping cash down on an expensive car, to trade up for something new two years later taking that massive depreciation hit. Listen to the finance guys and learn to use the system, not what your old man told you to do.
am1x90xnike
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anyone who leases will never be wealthy. Which is cool, wealth is not for everyone.
Cars loose monatary value, true, but they don't loose functionality value. So if you're buying a car to drive, as long as it has that ability, it won't much loose value, outside of repair costs. Plus you own something. You also don't have to pay as much in insurance. There is absolutely no financial reason to lease.
Now, if you like stunting, then leasing is your best option, latest and greatests every three years. But, if stunting is your goal, I can imagine that carries over into other financial decisions.
Leasing is one of the worst financial decisions one can make. Cats in here defending it, say you like to floss and keep it at that, there's no financial argument to be made.
$200 a month...every month for the rest of your life v $300 a month for 36 months...then never again. But, then again, I'm trying to be wealthy, and wealth is a lifestyle as much as an income thing.
Smart people never buy new anyway, car takes the biggest hit the day it's driven off the lot, but after three years, it doesn't loose much value and after ten, then twenty years it actually gains some value back (antique status). Let someone else take that depreciation, but three years later I'm in, min.
Personally, I don't like the idea of third party tracking systems in my car. Cars haven't much changed since their invention, I figured a lot of 90s cars perform as well as modern cars, w/o all the bells and whistles. I'm never buying a car newer than '06.... It just seems so pointless to me, all for show.
Cars loose monatary value, true, but they don't loose functionality value. So if you're buying a car to drive, as long as it has that ability, it won't much loose value, outside of repair costs. Plus you own something. You also don't have to pay as much in insurance. There is absolutely no financial reason to lease.
Now, if you like stunting, then leasing is your best option, latest and greatests every three years. But, if stunting is your goal, I can imagine that carries over into other financial decisions.
Leasing is one of the worst financial decisions one can make. Cats in here defending it, say you like to floss and keep it at that, there's no financial argument to be made.
$200 a month...every month for the rest of your life v $300 a month for 36 months...then never again. But, then again, I'm trying to be wealthy, and wealth is a lifestyle as much as an income thing.
Smart people never buy new anyway, car takes the biggest hit the day it's driven off the lot, but after three years, it doesn't loose much value and after ten, then twenty years it actually gains some value back (antique status). Let someone else take that depreciation, but three years later I'm in, min.
Personally, I don't like the idea of third party tracking systems in my car. Cars haven't much changed since their invention, I figured a lot of 90s cars perform as well as modern cars, w/o all the bells and whistles. I'm never buying a car newer than '06.... It just seems so pointless to me, all for show.
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I don't think people consider the cost of repairs and time when buying a car.
Yeah one day you "own" it, but now you're spending 1000s of dollars to maintain it. I don't know man them unexpected repairs of a 5+ yr old car are just a huge inconvenience to me. I'm extremely cheap about stuff, but what I do value is my time.
Edit: but that's not a fair comparison. Saying "300 for 36 months and then never again" that's false because you're going to have to repair it amd one day it's going to break down completely. And you'll have to start over with another "300 for 36 months". Its not like buying a house vs. Renting , cars aren't gonna last forever.
Yeah one day you "own" it, but now you're spending 1000s of dollars to maintain it. I don't know man them unexpected repairs of a 5+ yr old car are just a huge inconvenience to me. I'm extremely cheap about stuff, but what I do value is my time.
Edit: but that's not a fair comparison. Saying "300 for 36 months and then never again" that's false because you're going to have to repair it amd one day it's going to break down completely. And you'll have to start over with another "300 for 36 months". Its not like buying a house vs. Renting , cars aren't gonna last forever.
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Some of the wealthiest people in the world lease their vehicles through their businesses.
What are you even talking about?
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But wealthy folks are the ones... nevermind, saw sn.
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am1x90xnike
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Some of the riches people in the world lease cars. Rich =\= wealth. My car is ten years old, paid off have had it for two years, spent $1000k in repairs, so $6500 total...I'm good.
You don't get wealthy by paying someone else every month. You figure out a way for people to pay you. For example, buy a work truck (pick up) and rent it out to people moving.
Explain how paying someone $200 + a month helps you build wealth? Eventually the money you are no longer leasing with can be used for an investment.
Wealth isn't about having a bunch coming in, but having less going out.
You don't get wealthy by paying someone else every month. You figure out a way for people to pay you. For example, buy a work truck (pick up) and rent it out to people moving.
Explain how paying someone $200 + a month helps you build wealth? Eventually the money you are no longer leasing with can be used for an investment.
Wealth isn't about having a bunch coming in, but having less going out.
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Some of the wealthiest people in the world lease their vehicles through their businesses.
What are you even talking about?
exactly. If 300/month is the reason you didn't become wealthy. You weren't going to be in the first place. That's only 36k over 10 years. To wealthy ppl that's chump change...hell to somebody who makes 6 figures that's chump change.
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just had to quote this for those speaking on matter of which they dont understand
Some of the wealthiest people in the world lease their vehicles through their businesses.
What are you even talking about?
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Wealthy people are the main people who lease.
Dudes in here talking about financing a car means you own it lol.
If I stop making this car payment let's see just how fast they come pick it up.
Man dudes on Niketalk shunning leasing cars but advocate living at home with their parents.
I'm getting too old to be here
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paying the monthly car note for a car lease helps reduce tax payments come tax season which leads to you keeping more money in your pocket instead of giving it to uncle sam
al audi
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am1x90xnike
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36K, you buy a business worth 30k, put a little sweat equity and now you are owner of a business worth 30K and, long term will gain and grow more...it use the 36K to buy timberland, sell some rights, gain more still own land...use 36K to invest in stocks. There is a lot of ways 36K that doesn't burn a hole in your pocket can be spent.
To the clever, every dollar counts. There is no financial defense of leading...purely social. But do yall, its clear we won't be in the same tax bracket ten-fifteen years from now.
Eventually, if you own your car, you pay next to no taxes on it, look up antique car status.
Wealth =\= cash flow, you don't earn interest on cash, cash doesn't grow, in fact cash already has a 3% interest rate on it. Plus cash is absolutely taxable. Ideally, at least 75% of you're net worth should be tied up in investments and land.
To the clever, every dollar counts. There is no financial defense of leading...purely social. But do yall, its clear we won't be in the same tax bracket ten-fifteen years from now.
Eventually, if you own your car, you pay next to no taxes on it, look up antique car status.
Wealth =\= cash flow, you don't earn interest on cash, cash doesn't grow, in fact cash already has a 3% interest rate on it. Plus cash is absolutely taxable. Ideally, at least 75% of you're net worth should be tied up in investments and land.
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fontaine
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Also I don't want hear anyone give advice on wealth building if you are still buying shoes every month
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Man, I love broke wealth experts, always good for a laugh.
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