give you an anecdotal point of view from
my personal perspective and why leasing
and buying is situational for
everybody's situation so let's pretend
like we're buying a subcompact car okay
let's just call it like a Honda Civic
Toyota Corolla it's essentially a car to
get you from point A to point B right so
we have one option of buying the car
over here we have the other option of
leasing the car and in both these
scenarios let's pretend like we're going
to keep the car so we have a keep
scenario so you can buy it or buy it
after your lease is up makes sense okay
so the purchase price let's pretend like
we're gonna be paying seventeen thousand
seven hundred dollars for this
subcompact car our down payment is going
to be two thousand dollars and since
this is actually dealing with real math
and interest rates and for the sake of
not using a calculator I have this all
pre written down so bear with me here so
the interest rate is going to be four
point two two percent this is typical on
a car loan if you're a you know eight
hundred credit score it may be a little
bit lower than this but this is the
average rate right now term let's
pretend like we're financing this
vehicle over the course of three years
and then what our payment is going to be
using these numbers is actually 465 a
month okay so if we're actually gonna be
buying this car let's pretend like we're
actually selling it as well so our sales
price
after three years let's just say we're
gonna get 12 grand for it okay now with
the lease let me use a little different
marker here that way we can actually
differentiate let's say the down payment
because you're not actually purchasing
the car is $2,000 the lease term is
going to be the same thing as our buy
it's going to be three years the payment
for this now remember these aren't loan
payments these are just payments that
you're using to buy the car and
hopefully you guys can see this green
marker okay 1:59 a month and then the
buyback so at the end of your lease term
you actually have the option to purchase
the car it's gonna be let's call this 12
- right so twelve thousand two hundred
dollars okay so let's run through this
scenario very quickly here and again
hopefully you guys can see those numbers
in green so if you want to keep the car
we have the buy scenario we have the
least scenario okay so for buying the
car how much money do we have into this
deal so far well we know we have the
down payment which was $2,000 okay we
know that we paid 465 a month okay for
the course of three years so that's four
sixty five times thirty six months for
65 times 36 and this equals a total of
eighteen thousand seven hundred and
forty okay now we're going to lease the
car okay but we're gonna buy it back at
the end of three years so how much money
do we have out-of-pocket for this lease
we have our down payment which was two
grand okay we have the payments which is
159 a month times thirty six months okay
and then we have the buyback price of
twelve thousand two hundred dollars
a total of 19 thousand nine hundred and
twenty four so we can see here just by
keeping this car okay to buy the car out
right from the beginning cost us a total
of eighteen thousand seven hundred and
forty dollars over three years of
ownership to actually lease the car over
three years and buying it back at this
purchase price it's costing us nineteen
thousand nine hundred and twenty four
dollars so obviously you can see that
buying the car is more economical now
let's pretend like we're giving up the
car because most people in their lease
there's a higher percentage that
actually give back the car after that
three year period let's see how very
quickly how the math shakes out on that
okay so this is for keeping this is for
let's call it giving back so remember we
have eighteen thousand seven hundred and
forty into it for the buy however we're
actually selling it for twelve thousand
dollars because we own the car after
three years so this actually comes out
to be six thousand seven hundred and
forty dollars okay because think of it
like an internal rate of return if we
have a piece of real estate that's
giving us monthly rent rent rent rent
and we go to sell the house not only did
we realize the rent but we also realized
the the sale of the house the money that
we're getting for the house this is
similar obviously you're not getting
paid to drive your car but you own it
for a period of time but you actually
have an asset at the end of the three
years to be able to sell so we're
actually

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