The Truth About Leasing vs Buying a Car | 2018 #Best Education Page #Online Earning

It's true the automobile is the largest purchase most people will make that loses value immediately

So what do you do do you lease or do you buy the vehicle?

Hi

My name is Victor foetidus and I've been in the automobile industry for over 25 years and I'm gonna share with you

My expertise on this very very big question videos coming right up

Hi guys Viktor fight out of this and welcome back to my channel, like I said in the intro the

Biggest purchase most people will make that loses value immediately is an automobile

So the big question is do you buy or do the lease I've been in the auto industry for over 25 years

And I'm about to show you the difference between buying and leasing and the benefits between the two

Okay, so we'll start off with

Leasing so leasing a vehicle

Okay

Leasing a vehicle

Basically is saying that you are renting the vehicle from the manufacturer you don't own the vehicle

So you're paying a monthly rent fee so that you can drive the vehicle within a certain mileage that is

preset at the signing

So what that means to you is this that you are only leasing a portion of the vehicle? Okay, and

The benefit of that is this that typically leases last two to three years. So the first benefit is

because you're only leasing a portion of the vehicle is number one is

Lower payment

Okay, that's the first benefit

You typically are gonna have a lower payment because you're only lease any

Portion of the vehicle if that makes sense to you you're driving the whole vehicle but you're only leasing a portion of it

okay, the second benefit number two is

Usually

Under

Sorry about my penmanship

Usually under

Warranty

So typically Lisa's last

two to three years most manufacturers warranties are

36 to

50,000 miles from the manufacturer

So what that means to you is that there is no need to it to buy an extended service contract to buy an extended warranty

because you're always going to be driving under the umbrella of the

manufacturer's coverage

automatically another benefit of leasing a vehicle is

With the lease you're going to get gap insurance

What is gap insurance gap insurance is guaranteed Auto protection some people call it guaranteed asset protection

So when you drive your vehicle off the lot

immediately

It's going to lose a percentage of its value

So if something happens to that vehicle

Let's say you're in an accident or your car stolen and your insurance company decides they want to total out that vehicle

They are not interested at all at how much you owe on that vehicle

Remember you just drove off a lot and it immediately lost value

You you owe this much because that's how much you're paying for the vehicle, but it's only now worth this much

So there is a gap between what it's worth and what you owe

There's a gap in that gap meaning several thousands dollars

Your insurance company is going to step in and pay whatever they deemed the value of your vehicle

At that given moment in the current condition with the current mileage. You still owe

You know, I'm going to use round numbers you owe

30,000 they came in at

22,000 that's what they're willing to pay to pay off the vehicle. Well guess who owes who guess who still has to pay that?

$8,000 you do unless

you have gap insurance gap insurance will step in and

pay off any negative equity that your insurance company doesn't pay so a lease will usually come with

Insurance the reason the leasing companies give you gap insurance is because they still own the vehicle

They're protecting their investment as well as protecting you so that's a huge benefit

All right. So benefit number four. Okay, so number four

Is that you're always on the cutting edge of technology? Okay, so I'm going to put newest

Technology

Okay, so in the auto industry

Technology usually changes every two to three years when aura upgrades are at updates

You're in a lease for about two to three years

So every time you get a new car if you release another car after your term is up

You're gonna have the latest and greatest technology if you purchase a car and go and extend a term of let's say 72 months

You're gonna be in that same vehicle for six seven years

Or as long as you decide to keep it with the current technology

And the technology would have surpassed that already so you're always in the newest technology, which is very nice

okay, the other nice benefit is

Use a lot of manufacturers will include maintenance

programs with their leases so number five is

maintenance

And so what that means is they'll include oil changes or they'll include their full maintenance as depends on the manufacturer

okay, even if they don't include the maintenance your maintenance is going to be for the next two to three years on a

Brand new vehicle as opposed to maintaining a five or six or seven-year-old vehicle

For six or you know for six or seven years

so your maintenance costs will be lower on a

three-year lease on a brand new car as

Opposed to a car that you've kept for five or six years when things start wearing out when you need to replace start replacing things

So as you can see, there will be a different in the maintenance costs on a lease

So the fifth benefit and I'm going to erase this real quick so I can have some money to write

So the fifth benefit is something that I deemed

Market protection. So let me explain what that means. So this is number five

market

Protection

So, what does that mean what is the market protection so there are certain things that we can and

cannot control in the market

gas prices

Taxes interest rates real estate. These are all things that we cannot control

Those are some things that affect car values the value of a vehicle. So when you lease a vehicle

You have a what we call a guaranteed residual value all that means is this is a predetermined amount

That at the end of your lease if you chose to buy your lease

You know exactly what you're going to pay for that car based on the predetermined amount

So let's say your residual value of a vehicle

Residual lease is

twenty three thousand dollars

Okay, so, you know right now what you're gonna pay for that vehicle three years from now if it's a three year lease

This is the manufacturers best

Guess at what the valve value of the car is going to be in three years

But they can't factor in the things that we can't control which of the things I just mentioned

Real estate interest rates gas prices all those things affect the values of cars

Okay, the economy the you know the stock market all those things affect the value of this car

So this is the manufacturers best guess and with them what the value is

So at the end of your lease, if you have to love your car, let's say you know what? I'm interested in buying my car

You have control that's why I called it market could protection

Okay, you are protected against the things in the market that we can't control because you have choice

You can purchase your vehicle for

$23,000 plus sales tax and fees or you can turn in the vehicle. Okay

turn in and

Walk away from it now. Why is that a benefit? Why how is that market protection for you?

Because what you can do at the end of your lease is you can look at similar vehicles in your market

That are with similar mileage and look at their pricing if their prices are higher

Than what the residual value is of what you have to pay for this car if you wanted to buy it

Then you may consider buying it because the market dictates the pricing of vehicles so they are higher

Then you might have a pretty good deal here if they are lower than this residual value. Well, guess what?

You don't want to buy your car because now you're buying a vehicle

That's costing you too much based on the market value. Does that make sense?

So you can turn the keys in and walk away that gives you more control that gives you market protection

Do I sound like I'm a lease advocate I am why because I've been in the business for a long time. And also I

Lease all of my vehicles. My wife's cuddliest vehicles as lease are leased

My daughter's vehicles are at least because I know the benefits of the lease, okay?

so market protection

basically

Protects you against the things we can't control and it gives you more control because you have a choice at the end of your lease

And I want to mention one other thing. That is a huge huge

Benefit to leasing a vehicle

Okay

Here's here's the other thing. That's a huge benefit

When you buy a vehicle in you buy for five years or six years

Most people don't put a lot of money down because it's a depreciating asset

so they finance tax tunnel license and maybe they had a trade-in and that trade and they were upside down and because remember a

Vehicle once you drive it off a lot. It's going to lose percentage of its value immediately

so

What that does it creates a cycle a cycle of rolling in what we call negative equity

every time you buy a car, so let's say you bought a brand new car and you pay

$40,000 for it, but you had a trade-in in your trade-in was only worth 15, but you owed

19,000 so now you're buying a car for 40,000 plus your tax Thailand license and you're also

rolling in four extra thousand dollars

To pay off the trade-in that you just traded in with the negative equity. So that's added to your note

And so as you can see and then you add an interest rate on

Top of that and then you go on a longer term like an extended term like 72 months

To purchase that vehicle so you can get your payment's and a comfortable zone there

What is that doing? That's creating a cycle of negative equity that you'll never get out of. Okay, so

Here's the answer to that with a lease

Okay

Let's say you buy up that same car for forty

forty thousand dollars

And you're leasing it

You're rolling in

The four it ran of negative

Plus

T T and now tax Thailand license

Now yes, you're rolling in that four grand of negative equity. And yes, you are going to make it in your payment's however

instead of

Continuing the cycle at the end of your lease

here's your

Here's your plan

You have to have a you have to have a strategy and a plan when you're in this

Situation if you're rolling in negative equity a lease is probably one of the best you can do because after your 36 months are over

and

You've made your 36 payments on this lease right here

You turn in your keys

You walk away from the lease, but you also walk away from all of the negative equity

You're done because you've traded in your car on the lease

You've made your 36 payments as opposed to making sixty or seventy two payments with no money out of pocket

No money down and continuing a cycle of every time you trade in your car

you're going to continue to roll in more and more negative equity and

you'll always be digging a hole for yourself at least can stop that vicious cycle because

You roll it in one time. You can't do anything electronegative equity. That's your negative equity. You got to pay for it

But why why continue paying for it every time you buy a car you roll it in once?

You pay pay on it for 36 months. Yeah, your payment's gonna be a little higher because you're rolling in a negative equity

But your payments also gonna be a little higher if you rolled it in I purchase okay

So it's it's this is a much better strategy

so all that means to you is this that you make your payments 36 months and

At the end of your lease, you're turning your keys

You turn in your car you walk away from it and you walk away from the negative equity

That's why it leads with a huge benefit for people with

Rolling and negative equity on a trade. Okay, so

I'm not gonna make this video too too long because I could talk for hours about leasing and purchasing so purchase

Do I like purchasing vehicles sure

Will I purchase another vehicle in my lifetime

probably not and let me tell you why because

When I purchase a vehicle, I already know it's a depreciating asset

Why would I invest my heart money into something that I know?

Is gonna immediately lose value and continue to lose value as I Drive it and put miles on it as it gets older

It's gonna continue to lose more and more value my payment and my interest rate are net aren't gonna change

It's not going to change based on the value of the vehicle. It's not going to change based on what's going on the market

Once you've committed on a contract to purchase that vehicle

You're stuck in that

Purchase in that interest rate no matter what's happening in the market no matter what happens to the value of that vehicle

So some people say that our against leases they say we haven't I don't own my vehicle. I don't own anything

They put it in perspective for you. Okay?

You go in and buy a vehicle for 60 months

60 months

Okay, and you are financing it through your credit union

60 months credit union you

Don't own this vehicle either I

Hate to say it the credit union owns it and until you pay off that vehicle. You don't own anything

It's like a mortgage. Okay. Are you a homeowner? Yes, I own my home

No, you don't own your home you the bank owns your home you're paying to own it eventually

But currently you do not own your home if you owned it then stop making your payment and see what happens

Right. So if you actually truly own this vehicle, then you wouldn't make a payment on it you

Wouldn't pay it on on it at all. But the bank owns it so that's why you have to make the payment to the bank

okay, so

With a lease you don't own the vehicle either but in a 4gl lower payment you have gap

Protection you have market protection. You're always going to be under manufacturer's warranty

And typically you're gonna have some sort of maintenance plan

So basically, all you'll have to do is is gas it up and drive it

So yes, I'm a huge advocate for leasing

Because like us with my experience in the in the automobile industry for the last 25 years

leases have actually changed quite a bit and

It's a win-win for the consumer and the manufacturer

Let me tell you why it's a win-win for you because of the points

I just made okay, you always got brand new technology. You're always under warranty. You got gap insurance all those things

The why is it a win from the manufacturer? Well, it's a win for the manufacturer because now

You are as a consumer back in the market to buy another vehicle or to lease another vehicle in

Three years as opposed to five or six years

so now if you like their vehicle enough

We have or the manufacturer has a very good shot at earning your business once again

So now you are buying or leasing more cars sooner and quicker as opposed to longer and later

Does that make sense? So a manufacturer started to realizing that and put a lot of the incentives in the leasing programs?

so guys I

Want to end the video here?

I'm not against purchasing a vehicle if that's how you feel

If you feel strongly about that, if you're in a position to pay cash for a vehicle, you're welcome to do that

Okay, and you get to you actually will literally own that vehicle

Okay, you'll only depreciating asset but you will own it outright

I'm not against that interest rates. They can fluctuate

Depending on the market

60 months 72 months. It's up to you guys, but keep in mind keep the door open for leasing as an option

Because leasing has a lot of benefits nowadays and a lot of benefits of a lot of people just don't see or know

So again my 25 years in the auto industry has given me this knowledge and this experience

I'm going to be doing more videos about the automobile industry how to buy cars

I'm gonna do another video on purchasing a car not just the folk to focus on leasing here

And the things to do and not to do when you enter a dealership or when you're negotiating a price

on a new or used vehicle guys with that said I hope you enjoyed the video and

I'll be looking forward to the next one and I will see you on the other side

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