Why You Should Lease NOT Buy a Car

Why you should lease and not in fact buy your car. Now, a lot of people who will teach you basic money management will tell you don't get into debt, don't lease a car, don't buy a car until you can afford to buy the whole car. I actually think this could end up costing you quite a lot more money. What you have to look at when you're thinking about whether you're going to lease or buy a car is the total cost over the duration that you own the car. And a lot of people don't look at the total cost of the duration of ownership. So look, there's different types of leases. There's contract hire, there's leasing, there's leasing through a company. In fact, I'll cover that part at the end because actually leasing through a company is even better. It's so much better to be able to own or lease a car before tax and not after tax. Essentially, if you lease or buy a car after tax, then you're paying double. Excuse me, I've been singing God Save the Queen too much today. I've got a sore throat. So let me say that again. This is really important. If you buy a car or anything after tax, you are essentially paying double. So if you can get your car lease in an LLP company structure, or you're able to run an electric car where you won't get company car tax through a limited company, you are going to save double at least on the ownership of that car. Let me come back to that part in a moment. So thank you for tuning in. So here's 5 reasons why you should lease as opposed to buy a car. Now, there are some variables. If interest rates are really high, that's going to make the monthly payments more. But right now, interest rates are relatively low. People are, oh, they're 2%, they're 3%. But actually, the long-term average of interest rates is 5%, 6%. So interest rates are still relatively low compared to the long term average. The next thing that people never talk to you about is cost of capital. So whether you buy a new car, which is the worst, a used car, which is probably the second worst, a lease or a contract hire purchase might be the next worst or even the best. There's capital tied up when you buy a car. So if you buy a $20,000 or a $50,000 car, you have what's called cost of capital. Now you can get a much better return on your capital when you put it into an inflation-beating asset than a depreciating liability of a car. Now of course, leasing, for example, some old classics or leasing some supercars, that might not be possible. And that might be more expensive. But for your normal cars, your Volkswagen, Audi group, your German marques, it is normally far better to lease than it is to buy. So you've got relatively low interest rates, you've got cost of capital. The next thing, and again, no one tells you this, and that is the time and the money to sell it and to buy it when you own it. So when you sell a car, you've got to get that car set up for sale. That might cost you £500, £1,000, £2,000. Then you've got to try and sell the thing. You'll get haggled if you do it on a Part X, or you trade it in a dealer, they're going to give you 10, 15, 20% less. So people don't factor that in, and the, uh, buying and selling costs. I would say buying and selling costs, those one-off events, probably going to be about 10 to 15% of the overall value of the car. Now with a lease, you just give the thing back. Yeah, you've got to make sure it's in decent nick, of course you have, but you just give it back. You don't get any lowball offers, you don't lose 10% of the value in the sales cost. The next thing with leases is you can get end-of-line lease deals. So, um, I've done loads of lease deals, by the way. By the way, I also own some cars. I have a Ferrari Testarossa. It's better to own that than it is lease. I have an Ariel Atom. It's better to own that than it is lease. They actually go up in value. But the Range Rovers, the Panamera Porsche Turbo S's I've had they've all been better on a lease deal than they have on a straight purchase. And you can get these end-of-line lease deals. Now, um, what cars will not do is offer massive discounts. It's going to make them look bad and it's going to devalue their brand. However, what they will do is they will take the cars and they will sort of backdoor them through these leasing companies. You can, you can get them on a lower-cost lease so they can get the volume out, get rid of the end-of-line stuff they couldn't sell without massive discounts, dropping the price, and devaluing the brand. So you want to look for these end-of-line lease deals. You know, there's lots of, um, leasing contract, hire and leasing, and comparison websites for leasing cars. But if you could get an end-of-line— I remember my business partner got an end-of-line BMW M3 He got it for about £500 a month. I remember we got my wife an Audi RS6 for less than £600 a month, for what, back then, over an £80 grand RS6, because we've got them at the end of the line, at the end of the production run. And a lot of people don't think about that. Okay, so I'm going to give you, um, a summary. Here you go. So the great thing about buying, uh, leasing rather than buying a car— sorry, I've got a couple of spammers on my group. I just want to warn you, um, that I don't promote Bitcoin, um, and I'm, I'm disappointed here. Mark Benson, spammer. Jordan Smith, spammer. Um, and there's a fake Rob Moore account. Sorry, that just distracted me, but just warning, I will never be live and then promote fricking bullshit crypto scheme spam on my own page. So just be wary of that. I've got your back. All right, great. Now, a lot of people say, yeah, but depreciation of a car is factored into the lease deal, but it's often higher depreciation when you own. Mark Watson has made a really good point. If you put 40 grand into a car, the cost of capital of that, that could go as a deposit for a house. and you could own an appreciating asset instead of a depreciating liability. So loads of people out there, they think they're protecting you, they think they're giving you good advice. Don't get into a debt and never buy a car unless you can afford it cash and you can afford two of them. And they give you all this supposed advice, but actually over the term of the ownership of the car, you end up paying more. It ends up costing you more often to own. Now the, the final point I'm going to say before I do a summary is the myth of ownership. Some people say, well, I'd just like to own it. Well, okay, fine, you buy it, you think you own it, and in 5 years you sell it. So your owning period was for 5 years, it wasn't forever. So whether you buy or whether you lease, there's never going to be a forever owning period unless you buy a classic car. Like my Ferrari Testarossa, or you buy something like an Ariel Atom, you, a different type of car, not your everyday car. But other than your extreme marks and your classic cars, you're probably going to own them 3 or 5 or 10 years max. So whether you leased it for 3 years or owned it for 3 years doesn't make any difference. So what you've got to think about is total cost of ownership of the car for the length that you want to own it. Now, the added thing again on top of this for a lease is that you can have it for 2 years or 3 years, and then you can get yourself a new car every 2 or 3 years. Now, there are some things to be wary of, um, and that is, um, you've obviously got to have decent credit to be able to get a lease car. Don't go and lease a huge amount of money that you can't afford. And of course you've got to look at your mileage as well. So there are all these things to consider, but you know, mileage on a used— on a car that you buy is also going to depreciate the car. So, um, think about the mileage that you're going to do. Make sure you don't lease a car that you absolutely can't afford to pay the repayments on. You know, I guess there's just a couple of little caveat warnings there. Um, but other than that, Kane has said, why, if you genuinely had any respect for the Queen Um, I did my minute's silence at, um, yesterday at 8 PM. I did a couple of really nice honors to the Queen, um, and I took the day off, and I think that's fair enough. And Kane, why are you sitting here complaining about it and watching it? So I think I've done my bit, um, respect and honor to the Queen, who I think has done amazing work. Uh, all right, great. So quick summary then. At least you know I engage in the comments and I read your comments. Um, pumping out your shit— well, he says watching it. Actually, this could save you a lot of money. So, um, it's usually best to lease and not to buy a car. Reason number 1: the interest rates at the moment are relatively low compared to the long-term average. Big reason number 2 is you will have capital tied up when you buy a car. Is called cost of capital, and you can get a much better return on your capital in an appreciating asset, not a depreciating liability. Reason number 3 is no cost of sale. So when you have to sell a used car, it might cost you 10 or 15% of the amount of the car in repairs, and then getting lowballed on the time and the months that it takes to sell that car. Whereas you don't have any of that when you have a lease. You literally just give it back. Reason number 4 is you can get these end-of-line lease deals on really nice cars, maybe at the end of the production cycle, or maybe that the car manufacturers want to get out around the back door. Like I said, I got an Audi RS6 for under £600 a month. That's pretty bloody good. I remember my business partner got an M3 for about £500 a month. Yeah, I found these special limited edition M3s. You're not going to get that when you buy it new. In fact, they're going to be more expensive when you buy them new. Now, I did say I'd mention at the end about the company structure. Um, before I do that, you've got to think about what ownership really is. You know, you buy your iPhone, but then you change it in 3 years, so the ownership period is 3 years. So whether you lease something or whether you buy something, you've just got to think about the ownership period and what's the lowest cost in the ownership period to you for the same type of car. So actually this, oh, I own it because I bought it— well, no, all you did was tie up a load of capital, uh, and you're going to sell it in 3 years anyway. So something to think about. Okay, so the final thing then is the, um, buying through a company. So when you lease a car or buy a car through a company, you're leasing or buying it before tax, not after tax. And therefore it's essentially going to cost you half, because I reckon all in your income and other taxes, you just got to assume it's about 50%. In an LLP— now you need to get advice from an accountant on this because it depends on your type of business and your turnover, but I do this so I can say this— but I have an LLP where I have one car per partner. I have a Lamborghini Aventador have a Porsche 911, Porsche Panamera Turbo S, and a Range Rover. And these are owned— I think the Range Rover is owned in the company, it might be a Range Rover Sport. I've got multiple cars myself and my business partner. But you can own a car, one car per partner, in an LLP. No company car tax, owned before tax, running costs, maintenance, everything, even fuel run through the company. This is huge. Now, um, that's ownership, by the way, but then you can still get finance on that car. So you own the car, but then you get finance on it. Now, with electric cars, you can own them, um, or lease them in a limited company where you don't pay the company car tax. Company car tax is penal. It's huge. It's outrageous. But with electric cars, there are some subsidies and some tax breaks on that. So you can lease a car in an LLP, um, and not get the company car tax, and therefore leasing it pre-tax, not post-tax, therefore saving about 50%. Now here's another thing that all these people, you know, look, I respect people like Dave Ramsey, but he says never buy a car, um, 'Never lease a car, only buy it when you can afford to buy it.' But here's the thing, if you buy a car after tax, it's cost you double. It has. So my Lamborghini Aventador, 350 grand when it first came out, would have been 700 grand if I bought that after tax. So a lot of bad advice out there. These are my thoughts. I hope you found them useful. There's, what, at least 6 or 7 different reasons why I believe leasing is often better than buying. Make sure you share this video because I think people need to understand the true cost of owning a car, the flexibility of leases, the generally lower cost of ownership through the term, the flexibility of owning it or leasing it through a company, being able to get it pre-tax, not post-tax, therefore essentially costing you half. So something to think about. Now, if you'd like to continue to get good financial tips like this, if you'd like to get better financial education and knowledge, make, manage, and master money. If you'd like to learn how to invest in assets that produce recurring income, if you'd like to learn how to get your tax down, get your income up, if you'd like to learn all the different things that you can offset against your company go and join rob.team. And if you don't have a company, join rob.team and learn how to start a company. You can do it for £20, £50. 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You need to be smart with how you buy your cars or lease your cars, because remember, if you buy cars post-tax, you're paying double. And there are tax breaks on electric cars that you can actually lease in a limited company. And there are LLP structures, limited liability partnerships, where you can own one car per partner. And like I said, have a Lamborghini Aventador, a Porsche Panamera Turbo S, a Porsche 911, all owned in an LLP, which means I'm paying half because I'm owning them post-tax. I'll buy them, I'll put finance on them. So sometimes I buy cars outright in cash, like the Testarossa, like the Atom, but other times, like the Lamborghini, I'll just put a minimum amount of deposit down and I'll put finance on it, and I'll own it in an LLP, and I'll pay net half because it's pre-tax, and the fuel and the maintenance and the servicing and everything is run through the company and offset and brought down against the tax bill. It saves me tens of thousands a year. And you need to know how to do this stuff. And I interview my accountant in Rob.Moore, and it is usually far better to lease than it is to buy. You have cost of capital when you buy, which could have been in another asset getting a return. When you buy, you have the cost to buy and the cost to sell, and especially the cost to sell. It could be 10% of the value of the car, and it can take months. When you lease, at the moment interest rates are still relatively low. You have flexibility of changing that car every 2 or 3 years with virtually no cost to you other than your lease deal. You can run the lease through a company and save the VAT and get the VAT back, so that makes it 20% less. There's another added saving there. There's so many different benefits and ways of leasing cars. Sorry, we had a little bit of a connection issue there. Anyway, I've said my piece. Watch the replay. Thanks for tuning in. I wonder if you wouldn't mind hitting the share button. And remember this: if you don't risk anything, you risk everything. Let's get chatting in the chat. Have you got any questions? Have you got any comments? Do you do PHP? Do you do higher purchase? Do you do contract hire? Do you disagree with me? Let me know in the comments. Thanks for tuning in. I'll see you in Rob.team. And remember, if you don't risk anything, you risk everything.