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Leasing is for suckers. That's my honest opinion. We own all our cars outright. When you lease a car you pay more for it in the long run and it's a waste of money.
Not necessarily true. For many cars and many people, leasing is better than owning. You have a fixed low monthly cost that is easily budgeted for, while giving you the latest in safety equipment with a warranty so you don't have to work on it yourself (good for people who live in places where working on a car is frowned upon, such as many HOAs and apartment complexes). For people who change cars rather frequently, where even traditional financing or saving up to purchase outright is the same or more than a lease cost, and for people looking at EVs and PHEVs where the tech and car is obsolete in a couple years and the lease is heavily subsidized. I know a number of EVs that can be had for a zero down, $99/month cost, which is dirt cheap even compared to used cars you own outright.
While I own my own car outright, my wife's car is a lease, with a low fixed monthly cost, giving her the safest features, while affording me the luxury of not having to work to maintain it or fix it, due to the warranty and maintenance package. And when the lease is over, we just upgrade to the latest model, keeping her in the latest safety features and keeping the car in warranty. For my budget it's NO DIFFERENT than saving up every month to buy a car outright then saving up again to replace it when it wears out.
I think that Dave Ramsey's advice is good for people who are totally incompetent at managing finances and have dug themselves into a deep hole of bad credit and poor decisions.
If you are at all financially capable, then his advice is terrible. For instance, when you say "the average payment is $450-650 a month for 6-7yrs at average 8-10% interest" I can't believe anyone would be that incredibly stupid.
Dave Ramsey's problem is his advice has to be targeted to total morons and financial nitwits, and he has to make sweeping blanket statements, which aren't fully and totally applicable.
LOL. Nice.
Some new vehicles can be had for 0% for up to 75 months. I'm paying 1.75% from my credit union.
I used to listen to Dave but you can skip him for five years and the next day you listen will sound exactly like the last show you heard. It's repetitive repetitive repetitive, because as LeagleEagle says, if you're so far up the creek that you need his words of wisdom, you probably don't have a canoe, much less the paddle.
One thing that did strike me was how little he knew about cars. He's got a great gig going, what a great job. State the obvious to the oblivious, day after day year after year, throw in a pinch of that good old time religion, and have zero knowledge about cars or the automotive market, and make millions per year.
Of course, the people on this forum are gonna be against paying cash for cars
if it wasn't for credit, all these people would be driving beaters
I call this the entitlement generation
They all think that just because they have a job and credit, they are ENTITLED to anything
It has nothing to do with generations. It's common sense. If a person can make 7% in the market, they would be smart to take out a 1% car loan. You've demonstrated that not everyone is finance-savvy.
It has nothing to do with generations. It's common sense. If a person can make 7% in the market, they would be smart to take out a 1% car loan. You've demonstrated that not everyone is finance-savvy.
i paid cash for my cash for my car, while you pay monthly and dont owe ****
i have peace of mind, while you live in fear, no job is secured, millions of people with degrees who had been at their jobs for years, even decades, still got laid off
like i said, if it wasnt for credit, youd all be driving beaters
Not necessarily true. For many cars and many people, leasing is better than owning. You have a fixed low monthly cost that is easily budgeted for, while giving you the latest in safety equipment with a warranty so you don't have to work on it yourself (good for people who live in places where working on a car is frowned upon, such as many HOAs and apartment complexes). For people who change cars rather frequently, where even traditional financing or saving up to purchase outright is the same or more than a lease cost, and for people looking at EVs and PHEVs where the tech and car is obsolete in a couple years and the lease is heavily subsidized. I know a number of EVs that can be had for a zero down, $99/month cost, which is dirt cheap even compared to used cars you own outright.
While I own my own car outright, my wife's car is a lease, with a low fixed monthly cost, giving her the safest features, while affording me the luxury of not having to work to maintain it or fix it, due to the warranty and maintenance package. And when the lease is over, we just upgrade to the latest model, keeping her in the latest safety features and keeping the car in warranty. For my budget it's NO DIFFERENT than saving up every month to buy a car outright then saving up again to replace it when it wears out.
Ok and that works for you. Cars don't get that many safety feature changes in 2-3 years. The difference between paying for a lease and saving money is you have to make the payment to the bank no matter what your financial situation is or the car gets taken away, and at the end of three years you have nothing. You have to come up with money again to lease another car. Possibly get charged for damages to the lease for mileage or dents so that's a added unknown cost so there is more money. Cars need very very minimal maintenance in the first 3-6 sometimes even 8-9or more years if it's life. Services are almost nonexistant in the first three years with the exception of oil changes. By 6 years you may throw a set of tires and brakes on it maybe some fluid changes a cabin and air filter changes. Most cars tout 100,000 mile schedules on some services and have been that way for 10+ years. So cars today go a long time with minimal maintenance.
When you're paying yourself and have a rough month you can allocate money elsewhere or simply not make the payment. And saving the money pays you interest on that money. And you still have a asset you can sell and recoup some money when you go buy another car.
Leasing is great if there is a benefit like a deduction. I had leased vehicles when I had my business. It was worth it to lease rather than purchase to own. That's where fixed costs help. For personal use leasing has no advantage other than driving a nice car every xx months. Which is fine. If someone wants latest and greatest every 3 years ok. It's their money.
Ive heard Dave Ramsey and many similar financial advisors comment on how car payments are a waste, and if you have to make payments, you cant afford the car, so you should save up and buy cars cash. Then they will usually quote the average payment is $450-650 a month for 6-7yrs at average 8-10% interest. Im not sure how many Americans are actually buying $30-50K cars where they have to make 6-8 year payments at such high and almost insane interest rates.
Then the next advice that is given is for people to buy a $1500-$3000 car and then save the $4-600 a month on car payments to buy the next car cash, while pretty much neglecting the topic of upkeep on old beaters. As per many threads in this forum, we can all agree that a $1500-$3000 car will most of the time need $1000-3000 of work to be in top shape, reliable , and give you a piece of mind that it will start and not leave you stranded, unless you are a DIY person or got a previously owned well maintained car.
Many of my friends are now buying into this car advice, so my questions are:
Are they getting good advise or setting them up for trouble?
Do you consider car payments a waste or bad debt?
Should you buy a car cash only?
If you cant afford to buy a car cash, do you consider it that you cant afford the car and living above your means?
For people that take his/her advice, if your car broke down and you need a car ASAP, what other options do you have other than car payments if you dont have $3000, $5000, $10K set aside for a car?
Would you trade in your current car for a 10-15yrs old $1500 car, just so you dont have car payments aka debt?
Affordability is more about cash flow and insurance (if it went pear shaped RIGHT NOW can you rough it through a couple of months?) than money in the bank. Just IMO. It's more of a philosophical than a financial outlook to life.
I feel one has to weigh saving and frugalism vs actually living and enjoying life. There's a balance to be sure, and you shouldn't be irresponsible, but it's ok to stretch and make payments on that BMW if you have your bases covered. It really is.
i paid cash for my cash for my car, while you pay monthly and dont owe ****
i have peace of mind, while you live in fear, no job is secured, millions of people with degrees who had been at their jobs for years, even decades, still got laid off
like i said, if it wasnt for credit, youd all be driving beaters
As someone who owns 3 cars, 2 of which that are beaters, they are not always "cheap" and the key to successfully using them is having the backup when one of them goes down.
It's generally cheaper than finance charges, yes, but not everyone has the luxury of space for multiple cars, a place and tools to work on them, etc...
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