Leasing vs Buying a Car: The Truth Dealers Don't Explain | Avoid Costly Lease Traps
Car Connection Workshop
Leasing vs Buying a Car: The Truth Dealers Don't Explain | Avoid Costly Lease Traps
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Term
horsepower
Horsepower measures how powerful an engine is. More horsepower usually means a car can go faster and accelerate quicker.
Car
Porsche 356
The Porsche 356 is an old sports car made by the German company Porsche, and it was one of their first models. It’s known for being fun to drive and has a lot of fans because of its classic design and history.
Term
lease return
When you lease a car, you agree to use it for a certain time. At the end, you have to return it, and it should be in good condition to avoid extra fees.
Term
discrepancies
Discrepancies are problems or damages found on the car when you return it. If there are more issues than expected, you might have to pay extra money.
Term
mileage
Mileage is how far a car has been driven. When you lease a car, there’s usually a limit on how many miles you can drive, and going over that can cost you more money.
Term
normal wear and tear
Normal wear and tear is the usual damage that happens to a car just from driving it. Things like small scratches or worn-out tires are expected and usually okay.
Term
excessive damage
Excessive damage is when a car is damaged more than what is normal from regular use. This could mean big dents or broken pieces that need fixing before returning the car.
Term
certification
Certification means checking a car to make sure it's safe and in good shape before you can use it. It’s like getting a stamp of approval that the car is okay to drive.
Term
buying price
The buying price is how much you agree to pay for a car when you decide to buy it. You usually talk about this price before making the purchase.
Term
financing
When you finance a car, you're borrowing money to buy it and then paying that money back over time, usually with interest. It helps you afford a car without paying the full price upfront.
Term
buyback price
The buyback price is how much you can pay to keep the car after your lease is over. Knowing this helps you plan ahead.
Term
residual value
Residual value is how much a car is expected to be worth after you finish leasing it. It's the price you have to pay if you want to keep the car once the lease ends.
Term
leasing
Leasing is like renting a car for a few years. You pay to use it but don’t own it, and you have to give it back when the lease ends.
Car
Jeep
Jeep is a brand that makes tough vehicles, often used for off-roading. They are known for being able to handle rough terrain and are popular for outdoor adventures.
Term
lease agreement
A lease agreement is like renting a car for a few years. You pay monthly, but you have to follow certain rules, like not driving too many miles and keeping the car in good shape.
Term
manufacturer recommendations
Manufacturer recommendations are the rules set by the car maker about how to take care of your car. If you follow them, your car will run better and stay under warranty.
Term
service book
A service book is like a diary for your car, where you write down all the work done on it. It helps show that the car has been taken care of properly.
Term
bald tires
Bald tires are tires that have lost their grip because the rubber is worn down. Driving on them can be dangerous, especially in wet conditions.
LIVE
Good morning Niagara, you're tuned to car connection where the coffee's hot, the tools
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Thank you for taking me along each and every morning with the motormouth morning drive.
Our topic yesterday was how to buy a new or pre-owned vehicle and I just wanted to follow
up real quick with a comment I did not make and the number one thing is people asked me
in 31 years that one of the top 10 questions I get asked is what vehicle should I buy and
I would have my when I called my top 10 and I would rattle those off and you know what
people would buy and I'd say well after you've made your purchase would you mind just you
know shoot me a little email or a voicemail letting me know what you purchased so that
I can track that and they would always buy guess what not one vehicle on my top 10 picks
of vehicles that are reliable fit and finishes decent you can get some high mileage out of
it and even a not a bad return on your investment when you sell it privately or you know just
pedal it off to somebody else in the family and they keep it going and we did that number
of years we had some two cells and one of them reached like 850,000 kilometers and the
vendors were flapping it was done but it had had it had served well so buy the vehicle
you like with an explanation but do your own homework on it and that's why I gave you yesterday
in yesterday's podcast the outline that I personally even use when purchasing a vehicle
private I privately as I go through my checklist the same way exactly the same way so remember
the 24 48 hour cool down period rule take it and use it so that way if you wake up in
the morning day one 24 hours later and you're still feeling good about it great you get
to lay over one more and that next morning 48 hour morning you're not quite sure then that means
you need to redo what you've already started a vehicle purchase back up the bus can't tell
you the number of times people get stuck with vehicles they absolutely hate after they've
purchased it this thing just does not work for me my schedule with the kids and getting
everything done and getting the little one out of the backseat out of the child holder
thingy I call it a child gasket because basically holds a kid right in there small humans so
this morning's adventure with us our topic leasing versus buying and I do have a story
to share on that one time permitting I'll keep it as short as possible but you're going
to want to take some notes on this and I would highly recommend that you check in with a CGA
a certified general accountant and or a certified financial planning professional before taking
on that lease all right that's number one so we're going to we're going to pick up where
I've just left off here but I want to say thank you to our program partners that make
all things possible they help us to keep us going we need a lot more than what I'm about
to talk about to keep us going and that's you we need you to to like share follow ring
the notification bell actually watch the videos on our YouTube channel which teach you five
things all the time where it is what it is how it works how it breaks and if you had
understood more basics and fundamentals of owning and operating and automobile you probably
save yourself thousands of dollars in nonsense repairs every single year and I can say that
because thirty one years just being on the air fielding your questions that's what would
come up oh did you know your you should know that's not how that works you do it like this
oh I didn't know yeah that that answer right there costs you folks thousands of dollars
in unnecessary automobile repairs so where it is the part what it is how it works how it
breaks and learning the basic fundamentals of an automobile you don't need to be a brain
scientist or brain surgeon you just need to tap into our YouTube channel we have almost 300
videos up there now that are teaching videos that show you the basics and how things work and it
doesn't matter whether the vehicles three days old or 25 years old the basics never change they
never change they may change function style going from analog to digital non computerized to from
relays to ECMs and control units that's a nightmare let me tell you did you know there's more
wiring on an automobile today than there is to power up the space shuttle check that out yeah
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and quickly available by clicking on their logo they are changing lives one at a time in the nigh
region men women single moms children serving meals love and hope thank you to earl and louise grand
at city auto sales and leasing they've earned the respect of being a pre-owned automotive
sales store yeah a car store that's what i like to call them they're car stores
they're gta's the greater tranways premier pre-owned auto stores say that 10 times fast
low mileage quality vehicles at fair prices they sell no junk they also have available to you
in-house financing so good credit bad credit no credit sit down with them and talk about it
you can also lease a vehicle there as well your family is waiting for you to arrive and help you
pick out a vehicle that would suit your specific needs they do have a fairly decent inventory
but if the vehicle that you're looking for and interested in and is the one that you would
like to buy let her own louise grant use their resources to locate that vehicle for you so
you don't end up with somebody else's problems that's exactly it city auto sales and leasing
buy with confidence and honesty and nothing less that's city auto sales and leasing rainbow
motors and garage the brothers up in scarborough ontario sales and service that you can trust
they fix all years make some models including light commercial vehicles so you can purchase a
vehicle there and have it service there again they have a smaller inventory of vehicles
but rita and remiss they've got the resources to locate that specific vehicle that you're looking
for for you and pick it so you don't have to take a mechanic because those guys they are mechanics
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or a skunk and a mink coat so check out rainbow motors and garage sales and service you can trust
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them connected with us all right got your crayons ready let's rock and roll because i've got a
number of nuggets that you're going to need in order to understand leasing a vehicle versus buying
aka financing one and here's number one here's most of the reason why uh many of you choose
leasing is because the lease payment the payment is palatable so you can end up driving something
to impress people that you don't even know or don't even like that's the emotional part of it
and i'll share it just a very quick story once i've given you some information here
on what it means to be upside down and sideways in a leased vehicle first and foremost if somebody's
telling you lease the vehicle because then you can just you know when you're done with it you just
pitch the keys through the door walk off to the sun through the sunset no i used to do lease returns
for a major european car manufacturer and that's where i got the term ass man because i would have
to be the fella that looks over the vehicle the day your lease is expiring and enter all the information
of all the discrepancies on that automobile so i had a clipboard i had documentation that had to
be completely filled in because your vehicle's going back to the factory leasing company
and no you do not get to return it damaged unmaintained mileage way over uh and fully abused
you drove it for whatever period of time for your lease like you stole it
no you don't so that's where the rubber would meet the road and that's how i got that nickname
because my job was to scrutinize the vehicle because it's being returned you're finished
renting it that's right and this is what i tell people when you say lease or you see the word lease
i'd like you to insert and say it out loud the word rent because that's what you're doing
you're renting a car till the term is over then you don't get to hand it in all beat up like i said
and unmaintained you're going to pay for that and that's where i would come in and fill out all
the information on all the issues with the automobile what's wrong with it what is it what
is it going to need you get to pay for that so now i'm going to explain that to you then i'm really
in damage my job was to determine what is normal wear and tear and what is excessive
damage you get to pay for that number two oh it needs a couple of tires they're worn right down
they do not pass a certification you get to pay for that oh it needs brakes front and rear
you get to pay for that damage in interior normal wear and tear is fine but if it's
abusive wear and tear and neglect you get to pay for that if you've not kept up your factory
maintenance is not what you think when it should be maintained what has been set out for you with
regards to the the repairs and maintenance service intervals by the manufacturer if you have not done
all the services then from the point where you stop doing the service to now you're turning it in
your lease is expiring you get to pay for all those services that need to be done and caught up
all the air conditioning is not working you get to pay for that too to get it all fixed up so again
you do not rent that vehicle for the term of the lease and hand me the keys and say thanks
but that thing's a piece of junk well it is now but now you're going to pay to fix it up
the only other way around some of that stuff is if you buy another vehicle from the dealer and
they give you a break on once they've seen what it's going to take to bring that vehicle back
to a resale position they might give you a break on hey what you know what covers some of that work
some some if you buy another vehicle from us or lease it's usually lease another vehicle from us
because they make really good money on that just saying they do if you lease another vehicle from
us we'll we'll take care of some of the items that are on the return sheet to get that vehicle back
in resale condition because it can't go back to the manufacturer's leasing company in a bad
state of repair it does not it all comes back to you and if the mileage is way over we're going
to talk about that as well because you're going to pay for every mile that is passed the mileage
allotted on your lease okay so here's where if you took advice from a family member a friend a
co-worker yeah lease it because you can write that off if they're not a certified financial
planning professional or a certified general accountant they don't have any right to give
you that information because it's wrong if you're not a corporate business owner or a business owner
period or self-employed doing on-road sales then that lease is not writable off your income so I
would highly recommend that you check that out with a certified general accountant certified
financial planning professional to determine if your position would allow you to write off
the expense of the lease each month from your yearly your annual income so in other words
as my good friend Mike Basil would say leasing is not for the individual period
and that's a dealer owner spent that time with me on the air many years ago and we talked about
this and I want to thank him for educating me on a lot of the terminology because it later on in
life helped me when I was doing lease returns for a major European car manufacturer and people would
get so excited when I what are you writing down well you know it's just a dent in a scratch yeah it
has to be fixed you get to pay for that well why do I have to pay for that I didn't know I didn't know
too bad that's why you should read your lease and that takes me to that point
how many people just sign on the dotted line and go yeah I can make that payment I can comfortably
make that payment and I can drive this and I can flash it off to all my friends and you know I'll
feel like a big shot yeah that's going to cost you in the end so just so you know it is it's
going to come back it's going to bite you right in a bite okay so reading the lease agreement
completely before you even sign it and I recommend you take it to your to your local
law office or someone who understands that jargon because a lot of leases are very difficult to
understand the way they're underwritten you shouldn't sign any lease period saying you're
going to take that vehicle until you've had that lease a copy of that lease agreement go to someone
who can decipher it and then explain it to you in layman's terms that's how you get upside down
and sideways and lease and I'll continue okay so you decide yeah I'm going to buy that and I can
afford that payment every single month yeah I'm going to take it and you just sign on the dotted
line and you take it home all right that day comes like I just described the lease is over
now you don't own an automobile at that point okay so a couple of housekeeping points before you get
to that problem where you've signed is when you go to purchase the vehicle you make a deal on the
price of the car and you don't even talk about leasing it you settle on a for sale price that
means you walk in as though you're going to purchase it you're going to you've got your
financing arranged you're ready to purchase that vehicle you negotiate a buying price then once
you've negotiated buying price that's when you say I'm interested in leasing it so now you have a
locked in price if you go in and say I want to lease that out of the showroom there's going to
be no go negotiation on the price of the vehicle nope here's the number one it okay I can make the
payment so you're sold on the payment this is what happens you get sold on the payment but you don't
know the backstory okay so that's one big mistake right there next mistake you decide to lease it
you've settled on a price now you need to settle on a buyback price that means the day that your lease
is over so your renting of that automobile is over how much can I buy that vehicle for
so there is going to be a price only on that vehicle you need to know what that is ahead of time
because if you decide the day you turn it in well now I don't have a car now I got a range for one
this has been a good car I want to buy it now you're you're in you're upside down and sideways this
is where that that process begins because you will more than likely be overpaying on the residual
that's the term residual if you read the lease you would have seen that word printed in there many
times the residual what that means is the leftover monies owing on that automobile from renting it
will be the number that's non-negotiable that you have to pay for it to get the keys back
and drive it home and finance it so now you've got to finance it now here's the bigger problem
the residual what's left owing on that vehicle as it's you know your renting has expired and this
is the day you don't get to take it home again once the lease if that today's the day your lease
expires you no longer own the right to drive that automobile it's done it's done so now you've got
wheels so you look at the price tag of the residual what's left owing so that you can own it and here's
where the problem starts you saw the same vehicle for sale at another car lot for seven thousand
dollars less but you still need to finance an automobile right now here's the problem you're
going to finance it and pay more for it to own the one that you just finished renting
leasing i'm going to teach you that term lease equals rent you're not owning it you're renting it
just like you'd rent anything else an apartment whatever hotel room you rent it overnight
so now you now you're you're up you're really upside down and sideways in that lease do i walk
away from this go down the street by the same vehicle for seven thousand dollars less or do i
overpay for this and now i gotta finance it with an interest rate to take it home
that's the problem so if the residual is way too high because you did not negotiate at the time of
leasing a buyback price in other words a locked in number of what you're going to pay when you're
renting of that vehicle is over that's called the buyback price if you would have read your lease
you would have seen that written in there yeah okay so now you're you're really in deep you are
upside down and sideways and it's getting worse here's the next problem
you're way over on your mileage oops i'm sorry about that i i didn't mean to but here's the keys
how much over maybe you're 30 000 kilometers over did you negotiate more mileage on your lease
so did you buy some over mileage so in other words you you purchase the vehicle and they
you rent it so you sign the lease you're renting your car now and they give you x amount of mileage
included in the lease over the term of the lease so if the lease is three years and they give you
let's use 30 000 kilometers as per year or they may it may be less let's just use 30 so you're only
allowed to do 30 30 000 kilometers per year over three years you kind of knew that you might blow
over that but you weren't really paying attention to it because you didn't read your list your lease
and look at it and have somebody review that for you so now you're twice the mileage over what was
allowed on the lease so now you've got to pay now you're turning the vehicle in the renting time is
over lease is done you're 30 000 kilometers over mileage let's use for talking purposes it's a dollar
a kilometer over and that's probably low today that's probably low i will i will call the powers
that be and i will get that number for you straight up what it is how much on average our
lease is charging for over mileage so now you've got 30 000 kilometers over mileage
a lot of mileage at a dollar a kilometer you get to pay for that
mm-hmm now this is where you are completely upside down and totally horizontal sideways
in your lease you are between a rock and a hard place because now you don't own an automobile
you're going to have to pay more than what it's worth curbside because the residual is high
you're going to have to pay for all the maintenance and what's deemed over and above normal wear and
tear items you're going to have to catch up all the maintenance that you did not do in
accordance to your service manual the stamp is not in there for half a dozen maintenance is
you're going to have to pay for that you're going to have to pay for the over mileage
in order to return it tough spot that is very tough spot and i tell i'll tell you right now i
know a number of people off top of my head that that's happened to and their words were i didn't know
yeah this is a case where you need to know because if this happens to you it's a very uncomfortable
spot to be in because now you you need to go to a bank and finance it to buy it out
because the rest is going to kill you financially your wallet is going to start on
flyer by the time everything is all paid for and then you walk away and now you got to go and
buy a vehicle you see how this is going it's ugly for the the individual that should not
be touching a lease unless you own a corporation that's making scads of cash and you're looking for
write-offs to something to write down income leasing equipment i did that with our shop
we leased equipment at the end the buyout was a dollar there you go that's how you do it
the buyout was a dollar so i made all the lease payments on the machinery and the equipment
at the end of the lease a dollar we own it done finished there's no leans no nothing we're out
and that's okay at that point so now what do you do do you now you got to scramble you don't get
to drive that vehicle home the the renting lease is over it's over keys are handed in it's no longer
yours at this point in time it belongs to leasing company and they'll be in touch so now you got
to scramble to get financing on a vehicle that might be five five years old and you're going to
overpay and you're going to need to put some money down on that car to finance it you're going to
need they're going to ask for a down payment so now you got to come up with that so see how the
hole now gets deeper that's the upside down and sideways versus financing it if you had to finance
it from the very beginning probably would have changed your mind as to what you're going to
what you are going to be able to afford to drive but you're not going to be dealing with all this
other stuff because that is absolutely being stuck between a rock and a hard place how do you get
out of that i don't know that's what i had that's all i can tell you it's an idk moment i don't know
i've never been there what do you do because now you need to ride home and tomorrow you got a range
of ride to work because you no longer have a car so now i'm going to tell you a little story so that's
why if somebody's telling you to yeah go ahead and leave something i'm going to tell you two leasing
story real quick and then we'll close out with that today so when i was broadcasting from studios
in the us i would cross the border every single week and i was working with companies over there
that were program partners and sponsors of our broadcasts so the one day i get hauled in and on
the other side of course and with a young chap and then an advisor came along and got in on the
conversation and i was going over to collect some jeep parts from a recycle yard in buffalo
and oh you got a jeep the young chap says oh i just got one i said yeah what'd you buy and he told me
he says well i leased it and i looked at the older gentlemen standing next to him and i go
so so why why would you do that can i ask why why would you lease that do you have an owned
a company well no my friends told me i should lease it then the payments would be smaller
i said so did you like have somebody go over your lease or did you read your lease and understand
you know buying back mileage because if you go over mileage you're going to pay for every
mile over and that you have to do all the services and i rattled off a bunch of stuff and this older
gentleman officer standing beside him is going you're an idiot i didn't say in it i didn't say a
thing he said that to the young guy why would you do that and after i left from there he said you
know i wish i had met you a few weeks earlier because now i understand it he goes this is not
going to work out good for me i go no because if you over mileage you're going to pay by the mile
and you have to do all the services and in recommendation to the manufacture of the vehicle
to stay uh in good standing with your lease agreement he goes you mean i got to pay for
those expensive services i go every single one has to be done on time your book has to be stamped
signed to prove that it's it was done what dealer number it was done at etc i said and then you
don't get to not put tires and brakes on it and hand it in with baldini's and uh no brakes left
you get to pay for all that so whatever needs to be caught up when you turn the keys in you're
going to pay i think he went as white as a glass of milk and he all of a sudden i got my passport
back and he goes you can you can go now and thank you for that i go well thank me later
said but now you're stuck i said you can't you can't get out of that lease until it's over but
you need to sit down and have somebody explain that lease to you okay next one this one is even this
one is scary bought a bought a vehicle on lease and within a year and a half
was already going to go over mileage and to buy back the mileage needed to ride the lease to the end
was not worth it in money wise so kilometers so it's a year and a half into a three-year lease
so we got another year and a half before you got to turn it in and you're already at the mileage
so now to buy back a year and a half of over mileage was not going to work for them
they literally they parked the vehicle cleaned out the garage parked it in the garage
covered it up and it stayed there going nowhere for a year and a half till the lease was up
they had to go and buy finance a vehicle so now they're paying a lease every month on that vehicle
that's parked after a year and a half and having to finance a vehicle to get to and from work
for the next year and a half till they can drive it to the leasing dealer and return it
and that is reality so leasing versus buying you had better do your homework don't listen to the
outside white noise look for the signal the signal is the lease agreement you need someone to look
at the terms explain it to you in simple language and understand that if you're just an everyday
working joe schmoe like me you don't get to write that lease off your ink annual income
you're not a company you're not in business for yourself and if you don't make enough money
in your business so let's say you start a cottage industry at home and you're only making 24 k a
year uh you don't need any more expenses yeah you can you can put the push the loss of profitability
off you can push it off later till hopefully your company is now making 80 000 a year and
now you can bring those debts that you were carrying those losses and write them off of that
that income but you know what folks just don't go there don't sign up for that class so i hope you
got something out of this morning i really wanted to share that with you because it's kind of this
time of year where people start looking for buying automobiles and they they get sucked into if you
you know i don't see it as much anymore where advertisements for automobiles show you a leasing
price i'm noticing that they're not showing you um here's how much to lease this vehicle
and then they just mentioned in house financing but it's up to you the consumer not to become
a con consumer you got to become a prosumer that means get your answers from those who have the
fruit on the tree to the questions you have don't talk to the outside white noise could look for
the signal that can unwrap unpackage and explain things to you in easy terminology that you can
understand i hope that this morning even if i helped one person because i have more leasing
stories than that and they don't get any better folks it's the same vehicles beat up didn't get
its maintenance is way over mileage and it's gonna be a fortune to hand those keys back in
so at that point you're stuck and gonna have to finance it and then what you got is what you got
that's it too finny as they say so till next time happy healthy motoring
merry christmas everybody and peace love and much joy in the new year that's only days away
remember be kind out there okay peace patience and kindness with everyone right now you know
i can see it i was on the road yesterday everybody's minds the light the switch is on
but nobody's home if you know what i'm saying so peace patience and kindness and we'll see you
tomorrow morning at another episode of motor mouths drive time so be safe out there keep it
under 100 and put that coffee on because i think we're gonna come to your house especially if you
have snacks bye for now
About this episode
Leasing a car can seem appealing due to lower monthly payments, but it often leads to hidden costs and complications that many consumers overlook. Niall Motormount Jenkins shares insights from his extensive experience, highlighting the pitfalls of leasing versus buying. He emphasizes the importance of understanding lease agreements, potential over-mileage fees, and maintenance responsibilities. With real-life stories illustrating the consequences of poor leasing decisions, this episode serves as a cautionary tale for anyone considering a lease without proper guidance.
Original notes
Thinking about leasing a car instead of buying? In this episode, we break down leasing vs buying, explain why leasing is really just renting, and reveal the hidden rules, mileage limits, penalties, and buyout traps most drivers never understand - until it's too late.
If you've ever felt upside down, sideways, or stuck in a lease, this episode is for you. Learn how dealers structure leases, why payments look cheap but cost you more long - term, and when buying actually makes more financial sense. Know the rules before you sign. Don't let a lease sign your wallet away.
Thank You, for Watching our youtUbe Channel and listening to our morning drive podcast on iHeart, available wherever you pull your podcasts from!
Like, Subscribe, and comment below- have you leased or bought, and would you do it again?
Ring the bell so you don't miss future Motormouth Morning Drive Episodes.
Follow us on Facebook @ Nile Motormouth Jenkins, Catch us on StevnesvilleOnTheWeb.ca Click on Businesses tab to find us there ! We are also on Instagram, Exclusive Videos on FB and Instagram! Check out the Car connection Merch - link in the description
Visit us at ccbusnet.com our web site, where all of our program partners are listed for you to connect with let them know Motormouth sent you! All links top right corner of our home page also for YouTube, Facebook, Instagram, iHeartRadio, stevensvilleontheweb.ca, and our merch store. Appreciate all of your support it all matters to those who need our help to see. them though tough times. Happy Healthy Motoring Friends, Luv Y'all very much! NMJ
Car Connection Workshop
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