Leasing vs buying a car

Brad Barrett strongly advocates for buying used or lightly used cars instead of leasing or buying new vehicles. Here are his key reasons:

1. Cost Saving: Leasing or buying new cars is a costly endeavor, with many families spending around $800 a month for two cars, not including insurance and gas, which can push the total cost over $1,000 monthly. Brad believes these expenses are financially excessive 1.

2. Depreciation: New cars suffer significant depreciation in the first couple of years. Barrett suggests buying a reliable used car to let someone else take that depreciation hit. For instance, he bought his wife's Toyota Highlander at half the sticker price when it was four years old with only 27,000 miles on it. They still use the car after many years with minimal issues 1.

3. Investment Opportunity: Instead of making constant car payments or leasing fees, Brad recommends investing that money. He illustrates this with a comparison between continuously leasing cars versus buying a car and investing the leftover money. Over a 45-year period, the savings and investments can amount to nearly three-quarters of a million dollars 2 3.

   Smart Car Ownership

   Brad Barrett

   Brad and Jonathan discuss the importance of smart car ownership and how it can save families thousands of dollars per year. They recommend buying used or lightly used cars to avoid major depreciation and highlight the benefits of doing so, including long-term savings and reliability.

   

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   021 | The Pillars of FI

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4. Alternative Options for Lease: For those in leases, Brad mentions a strategy shared by a guest where you can sell your leased car to a dealership like CarMax. This can often result in financial gain if the car's value exceeds the residual value, which can then be used to buy a used car and save on future payments 4.

Brad's overall advice is to avoid leasing and new cars and instead focus on purchasing used cars, allowing depreciation to benefit you, and to use the savings for investments, leading to significant long-term financial gains.