Why Car LEASING is Better Than BUYING ( Especially with Electric Cars )

by birtanpublished on October 31, 2020

I'm going to tell you why leasing a car is a much better deal for most people rather than buying that very same car especially when it comes to electric cars of course there are exceptions to the rule and we'll go over those as well but for the rest of you i think i can save you some money so let's get started welcome to e4 electric your number one source of electric car scoop if you are interested in everything that's going on in the world of electric cars you came to the right place all you have to do is click on that

Subscribe button and the bell notification icon so you don't miss anything moving forward first let's get something out of the way and and it's the notion of people saying i don't really want to lease a car because i want this car to be mine i want to own this car well first of all you don't really own the car right because most of the time you're going to finance it through the bank and it's the bank that owns the car and then your financial future for the next five

Years and i'm assuming that we are all on the same page that buying a car for cash is like literally the worst financial decision you can make for yourself except for that exercise bike that's in your garage and even if you do buy the car for cash and you own it i mean you own it until you don't when you sell it to the next person and then oops i just described the lease now as i promised in my opening let me go over some exceptions there are actually five

Exceptions of cases when you should not be leasing your car and purchasing is your best option before that a quick reminder that this video and this channel is sponsored by candy america have you met the most affordable electric car in america check out the k27 for a limited time launch price for under 10 000 that's right after the federal tax credit or their second model k23

For under 20. delivery start just in a few months so make sure to reserve yours for just 100 refundable dollars before the price goes up by using the link in the description of this video all right so let's talk about the five exceptions of when you should not be leasing your car well first one is very simple if your credit score is not very good then they simply won't let you lease a car it should be in a top tier which usually is 640

Or higher number two is when you just love driving the same car for a long long time you buy one and just kind of run it into the ground and it lasts longer than your marriage that's when you should probably buy it uh leasing is usually when you lease for about two to four years which i guess is still a little longer than your average marriage in california number three is when you drive a lot and i'm talking about over 15 000 miles per year usually that's the cap of how many miles you can

Put on a car every year when you're leasing now if you do drive more than that you will still end up paying for extra mileage but generally speaking if you're driving more than 15 000 miles per year leasing is probably not for you number four is when you don't buy new cars at all you only buy used cars and you can only lease a new car and number five is when you love to mod the hell out of your car change the wheels change the seats

Wrap it you should not be leasing that car you better own that monster now that we got that out of the way and i believe the majority of the people will not fall into those categories let me know if you do in the comment section let's talk how you can benefit and by benefit i mean financially benefit from leasing an electric car now a lot of people choose to get new cars and then get rid of them after only a few years because they get the latest and greatest technology the latest safety features

The roadside assistance the warranty the trouble-free car and so many other benefits number one is very simple you will save pretty much half of the sales tax when you're leasing a car let me give you an example let's take i don't know a ten thousand dollar car i don't know how that number got into my head and let's say that the sales tax in your area is nine percent so you will pay nine hundred dollars in sales tax

On a ten thousand dollar car if you're purchasing it i know that because i am a russian and we are very good with math and by the way when you buy your car and pay the sales tax it doesn't matter how long you're going to keep this car even if you sell it the next day you still owe the entire sales tax and it will be the next person who will pay the sales tax on the next purchase price but if you lease that very same 10 000 car you will only pay the sales tax on the amount of usage of that car

All right so how do you determine this usage amount well when you lease a car you and the bank agrees to a price that the bank believes this car is going to be worth when you are going to be returning this car in about three years that's your residual value and the difference between the residual value and your purchase price is essentially the amount of money that you will be paying to the bank in those three years for usage of this car and that's the amount

On which the sales tax will be applied rather than the entire price of the car now usually the lease term is about three years and the residual value typically is about 50 so if we're talking about a ten thousand dollar car the residual value will be five thousand dollars therefore the usage amount will also be five thousand dollars and therefore you will only pay four hundred and fifty dollars in your sales tax and let me use my math russian mathematical skills and let you

Know that 450 is half of the 900 that we were going to pay on the purchase and that's because the sales tax is applied essentially on just the half of the value so in this case of a ten thousand dollar car you are saving 450 dollars for no other reason but because you are leasing this car and not buying this car but now imagine if you're buying a 50 000 car that's 450 multiplied by that's a lot of savings now let's move on to another benefit that only applies

For leasing electric cars i am talking about the 7 500 tax credit that you usually get the next year when you do taxes after purchasing an electric car now if you're leasing your car you don't have to wait at all the bank will be claiming this tax credit and therefore they will calculate the 7 500 in savings right into your lease so instead of waiting for your 7 500 sometimes over a year you get this

Savings instantly now i should mention that some manufacturers like tesla and general motors do no longer have the federal tax credit applied to them and some of the other manufacturers are getting close to having theirs phased out over a period of a year number three and this is my favorite because you either get to save a lot of money or prevent yourself from losing a lot of money and i'm talking about depreciation

And that's usually a big concern especially for electric cars because they are full of technology and anything with high tech depreciates much faster sometimes a car can depreciate just because the economy went down you might have bought your car when the economy was great and you were buying it at the relatively high price but then in three years the economy goes down and all of the prices go down and your car ends up being worth less than you thought it would when you were

Originally purchasing it all right let's compare the same two ten thousand dollar cars side by side but one is a lease and another one is a purchase and once again let's go with a 50 depreciation on your leased car so therefore the residual value is expected to be five thousand dollars after three years now let's say in three years this car is actually worth more than everyone expected because the economy is good or this was a very successful model and the car is worth six thousand

Dollars if you purchased it you will sell it for six thousand dollars and therefore you paid four thousand dollars in three years to have this car now if you're leasing this car you were realizing that uh oh i paid five thousand dollars to have this car for three years but you only owe five thousand dollars to the bank so you pay that get the car out of the bank you buy it out and then you sell it for six thousand dollars because that's the

Market value so at the end of the day you also paid only four thousand dollars to have this car for three years but and this is a pretty common scenario what if the car is worth only four thousand dollars after three years again could be a bad economy could be that the manufacturer came up with a much better model with a longer mileage and better tech and so forth so now it's just four thousand dollars after three years

Well if you own this car then you will only get four thousand dollars out of this car again market value and therefore you paid six thousand dollars to have this car over the three years however if you were leasing this car you already had a deal with the bank that all you owed to them was the five thousand dollars that you paid and now it's their problem that they're stuck with a five thousand dollar bill on a four thousand dollar car

So this is the only time when the bank gets screwed by you so if you leased this car you paid one thousand dollars less than the person who bought that very same car and once again if we were talking about a fifty thousand dollar car you would have been saving five thousand dollars for no other reason but because you leased so that's a lot of savings once again for no other reason but because you chose a lease versus purchasing exactly the same car and keeping it for exactly the same period of time

However i'd like to mention a few nuances that you should probably know about when you're leasing a car first if you decide to return your car at the end of your lease there might be a small return fee usually around 500 unless you're getting another car from the same manufacturer in that case a lot of them will waive that return fee and you'll pay zero secondly when you're negotiating your lease please negotiate the price of the car

First make sure that all of the incentives and discounts are calculated and only then negotiate the lease itself and thirdly never buy the car out of the lease to keep it only do so if you're just about to sell it because it's worth more than your residual value alright i hope i helped you save some money with your next new car looking forward to all of your comments other than that see you next time and remember to stay charged

You

Related Videos

I'm going to tell you why leasing a car is a much better deal for most people rather than buying that very same car especially when it comes to electric car...
Everyone's excited about tesla's battery day but it may just have to be about catching up and taking its lead back from lucid motors i will show you the...
Have you ever wondered what happens to those beautiful concept cars that we see at the car shows and on social media like here on youtube somehow don't look...
Trump goes electric and promotes the all-electric pickup truck from lordstown motors at the white house event how did this very unlikely turn of events come abo...
hello guys even here and this is 2020 Mercedes AMG s 65 and here you can see the key fob to the vehicle and also key fob to the auxiliary heating so guys befo...
hello guys even here and this is 2020 mercedes-amg s65 how gorgeous is this let me know in the comment section down below and also you can see the GTR pro the...
Have you guys seen the video of the best tesla cyber truck replica in the world if you haven't well you're looking at it right now but as you can see th...
Tesla battery day just concluded and i know some people are a little disappointed but i am not so i'm going to tell you how it went and about the three big ...
Tesla has outlined its future at their battery day yesterday and today less than 24 hours later their futures got a little more competition specifically for the...
Sandy monroe is going to be here to tell us what really happened at tesla's battery day give us his impression and also some perspective of what to expect m...
Tesla battery day left people divided was it amazing was it disappointing well i got a couple of guys who can definitely help us figure it out both our channel ...
Sandy monroe is back to talk about the biggest takeaway from the tesla battery day the 25 000 tesla and we're gonna start right now welcome to e4 electric ...
So let's try an acceleration let's do this this is frozen this is I couldn't do like a big hole because there was a huge traffic a huge Butt on tr...
This video was made possible by cluttering blathering produces custom feet rubber and trend mats since 1949 I bought these perfect mats myself a year ago for my...
hello guys even here and welcome to this video so this is Mercedes AMG and gt-r Pro Edition we can see here in the key fob to this vehicle and in this video ...
If I want to overtake I can't put car is now going automatically car is overtaking not me you can see that easily now Kara can go no domestic lien changing ...
so now we can take a look at the interior of this car and pro gives you package seeds so that's that's really really special so we can see the dynami...
Hello guys one here and welcome to Brussels Motor Show 2020 and this is mercedes-benz S 560 e long grunt Edition and we are looking here at the entrance it blue...
so guys here is the GL e53 4matic plus so this is the SUV variant as you can see and it's really gorgeous I love these wheels you can have them on a lot of...
A motion start oh it has like a box from exhaust Wow because people said it doesn't help I want to show you how this car looks if you haven't seen and...