Dave Ramsey on Leasing a Vehicle: Make Informed Decisions

Dave Ramsey has a clear stance on leasing a vehicle, and it's not a positive one. He believes that leasing a car is essentially renting a car with the option to buy it at the end of the lease.

Leasing a vehicle can be a costly mistake, especially if you're not careful. According to Dave Ramsey, the average person pays over $1,000 more in lease payments than they would in a car loan.

You might be wondering why leasing a car is so expensive. One reason is that you're paying for the depreciation of the vehicle over the lease term, which can be several years.

Intriguing read: Re Lease Car

Dave Ramsey has a strong opinion against leasing a car, calling it a "fleece." He believes it increases transportation costs and goes against some of his baby steps. In fact, he says he'll never lease anything except for a short-term lease on a building or office space.

According to the New York Times, one out of every four new vehicles is rented, but Dave Ramsey thinks this is not a prudent choice. He's vocal about his opinion, even expressing it in a reply to a question on how to get out of a car lease.

Dave Ramsey believes that leasing is similar to financing, and he claims that in most cases, it's not a good idea. He thinks it creates the same effect as buying a car that's out of your budget. If you've ever gone car shopping, you've probably been offered the option to lease a car by the dealer.

Leasing a car can seem like a good deal on the surface, with lower monthly payments than a car loan. However, in some years, the dealer will ask that you return the car, buy out of the lease to keep it, or get a lease on another car. Experts like Dave Ramsey are against leasing a car because it's often more expensive than buying one.

In fact, our opinion on car leasing aligns with that of experts like Dave Ramsey and other financial gurus. If all factors are taken into account, opting for a car lease is way more expensive than buying a car. The only time leasing a car might pay is if you invest the cash you would have used to purchase it.

Leasing a car can be a complex decision, but Dave Ramsey offers some clear guidance. If you're considering buying a leased car, the first step is to determine its residual value, which is the price the company thought it would be worth at the end of the lease. The residual value is preset when you lease the vehicle.

The big question is, what's the car actually worth? If the company thought it would be worth $12,000 and it's actually worth $14,000, that would be a good deal, and you'd want to buy it instead of turning it in. You'd be getting a better deal than if you were to resell it.

Financing a car after the lease term is not a good idea, according to Dave Ramsey. It's essentially the same as walking onto a car lot and financing any other $12,000 car. You'd be better off paying cash and keeping the car.

If you make $60,000 or more, Dave Ramsey suggests saving up and paying cash to keep the car. However, if you're making closer to $30,000, it's likely not worth it. The decision ultimately depends on your income and financial situation.

A different take: Equipment Financing Leasing

Leasing a vehicle can offer several benefits, including getting to use a brand new car without worrying about major repairs. You'll also have a low monthly payment, which is often less than a car loan payment.

However, it's essential to consider the commitment involved, especially if you're only leasing for a short time. Leasing can be a good option if you're in a supervisory role for a short period, for example.

Leasing can also help you build credit, but it's crucial to make timely payments to avoid damaging your credit score. Missing payments can have serious consequences.

When it comes to buying a leased car, you'll need to consider the residual value, which is the car's worth at the end of the lease. If the company thought it would be worth $12,000 and it's actually worth $14,000, that's a good deal.

In some cases, it might make more sense to turn in the car and not buy it, especially if you're making a lower income. If you make $30,000 or less, it's likely not worth buying the car.

Ultimately, the decision to buy or lease a car depends on your financial situation and priorities.

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Leasing a car can be a convenient and luxurious option, allowing you to use a new vehicle without worrying about major repairs. You'll typically have a low monthly payment, often lower than a car loan, but be prepared for a down payment.

You can lease a car for a short period, such as two years, if you only need a vehicle temporarily. This is a good option if you're in a supervisory role in a different city. However, be aware that missing payments can negatively impact your credit score.

At the end of a lease, you have the option to buy the car, but it's essential to consider its residual value. If the company estimated the car to be worth $12,000, but it's actually worth $14,000, buying it might be a good deal.

For more insights, see: Car Lease down Payment

We've all been there - signing a lease without fully understanding the costs involved. In this case, a couple thought they could afford a lease payment for a new truck, but ended up owing $25,000 more than the truck's value.

Low mileage is often touted as a benefit of leasing, but it's not always a guarantee of lower costs. The couple in question had a truck that averaged only 3,000 miles a year, but still had to pay a significant amount for wear and tear when they turned it in.

Lease agreements can be complex and full of hidden fees. The couple was hit with a $400 fee for simply turning the truck in, on top of the $1,500 they owed for wear and tear.

It's essential to carefully review your lease agreement and understand all the costs involved before signing. This can help you avoid costly surprises down the line.

You're considering what to do with your leased car, and whether to buy it or trade it in. The price for buying the car at the end of a lease is called the residual value, which is preset when you lease the vehicle.

If the residual value is lower than the car's actual worth, buying it might be a good deal. For example, if the company thought the car would be worth $12,000 but it's actually worth $14,000, that's a good deal.

Financing a car after the lease term is essentially the same as walking onto a car lot and financing any other $12,000 car. You're just changing the format from leasing to payments.

If you make more than $60,000, it might be worth saving up to pay cash and keep the car. But if you're making closer to $30,000, it's likely not worth it.

I paid $305 a month for 3 years with $1800 down on a 2020 Corolla and then paid cash at the end to own it outright.

Buying a car with a lease is essentially a calculated loan, with interest, from the purchase total down to a value less than what it can be sold for.

The leasing company, also known as the lender, has to earn a profit on their money lent, so they set the buyout amount to be less than what the resale will be.

I remember buying my first car (used) at a dealership (with payments of course) in the 90s for roughly $8000, and decades later, I purchased a used Camry for $10,000 cash.

If you buy a car with a lease, you're essentially renting a vehicle with a built-in expiration date and hefty disposition fees.

There is a reason Dave Ramsey calls leasing a car a 'fleece' - it's a way to make money for the leasing company, not for you.

Here's an interesting read: No Money down on Car Lease