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Speaker 4: My graduates from my school being forced back drop b
Speaker 4: drop my.
Speaker 2: Drop back drop drop. So we're gonna jump right into it, right.
Speaker 2: So we get a lot of feedback on Instagram recently
Speaker 2: about leasing cars, buying cars, right now you have a
Speaker 2: wealth of information being in the car industry for how long,
Speaker 2: over ten years.
Speaker 4: Well, twenty years now this year, actually twenty years in
Speaker 4: the car industry from the bank to the dealership side.
Speaker 2: Yeah, you've worked every every facet, basically every fascet. So
Speaker 2: all right, so we're gonna get into your backstory. But
Speaker 2: before we get into the backstory, I want to just
Speaker 2: jump right into it because people take this like very personal.
Speaker 2: I notice, it's like a real personal thing. Like it's like,
Speaker 2: you got like a thousand comments over a video that
Speaker 2: we're posting and people are like, that's a terrible idea.
Speaker 2: Should never lease a car? And people are like, no,
Speaker 2: you should never buy a car. People arguing with each other,
Speaker 2: they're about to start fighting on Instagram. So it's like
Speaker 2: I realized it's one of those things that's very emotional
Speaker 2: for people, and nobody wants to feel like they made
Speaker 2: a mistake. So if you brought a car, it's like,
Speaker 2: you don't want to admit that that might be a
Speaker 2: bad you brought up at least a car. You might
Speaker 2: not want to say that's a bad idea. So everybody's like,
Speaker 2: you know, so my personal opinion on it is that
Speaker 2: you know, there's no right shoe that fits all feet. Right,
Speaker 2: leasing is a great option for a lot of people.
Speaker 2: Buying a car could be a great option for a
Speaker 2: lot of people. Buying a used car could be a
Speaker 2: great option for a lot of people. Think with our podcast,
Speaker 2: we're just trying to provide information, right, so and.
Speaker 3: Just so we know, like we've done both.
Speaker 2: Oh yeah, Personally, I tell my story. Yeah, so my
Speaker 2: personal journey and cause is when I when I graduate
Speaker 2: from college, Right, that was my first time getting a car.
Speaker 2: I didn't have a car before that. So when I
Speaker 2: graduated from college, I came home and the first car
Speaker 2: that I had, I wanted a luxury car, so I
Speaker 2: brought I brought a used Infinity out of G thirty five.
Speaker 2: Infinity like a couple of years, but it was it
Speaker 2: was nice car. Cool that Uh So I had to
Speaker 2: had a G thirty five and it was nice. And
Speaker 2: I had that car about five years. I had a
Speaker 2: terrible interest rate because I didn't have any credit. So
Speaker 2: I'm just trying to figure it out as I go.
Speaker 2: So in year five started to like fall apart tires.
Speaker 2: I had to start buying tires and like transmission and
Speaker 2: a whole bunch of everything to start falling apart on it. Right,
Speaker 2: So I need a new car. So when I was
Speaker 2: I went to the now it sound upgrade. So I
Speaker 2: went to the BMW dealership and I was about to
Speaker 2: get a BMW. So when I went to the dealership,
Speaker 2: I want to buy. I want to buy a car.
Speaker 2: I'm thinking, like, I want to buy a car. On
Speaker 2: a rent a car, buy a car.
Speaker 3: We heard that that that line, Well, it's all right,
Speaker 3: we don't buy we don't. At least we bought the
Speaker 3: whole cars you should. We grew up thinking like, yeah,
Speaker 3: you got to buy a car.
Speaker 2: Jay Z really tanged at our ring shot shout out
Speaker 2: to Jay. I saw a guy. But yeah, he said
Speaker 2: that line. We don't least we bought a whole call
Speaker 2: as you should. We like we got by car. That's
Speaker 2: the mentality he was having. So when I went to
Speaker 2: the dealership, that the guy he was telling me, he's like,
Speaker 2: nobody buys called. Everybody that comes here has money. Nobody's
Speaker 2: bout ninety percent of people here at leasing cars. So
Speaker 2: I'm like why, And then I started to dig deep
Speaker 2: into it, and then I started to understand why he
Speaker 2: said that as far as like the tax business benefits
Speaker 2: and all of the different things that come the benefits
Speaker 2: that come to leasing. So then my last two cars
Speaker 2: at least I had at least a BMW now leasing
Speaker 2: the bens and I don't know what I'll do next,
Speaker 2: but I'll probably.
Speaker 3: End up our story of the Cimmar Like around that
Speaker 3: same time, before you had a car, he was driving
Speaker 3: everybody's car, Like, SHO need your car, So he was
Speaker 3: driving cars and he I brought it with me when
Speaker 3: I got my second car was a BMW and we
Speaker 3: had a crazy story there at the dealership, but I was.
Speaker 3: I financed it and I got the payment out. They
Speaker 3: were like, I never forget.
Speaker 2: When you crash your car before I got it off
Speaker 2: the line.
Speaker 3: Yeah, we crashed it right, Yeah, as soon as I
Speaker 3: drove they were like, ah, now just leave it will
Speaker 3: come back another day. So I crashed it, well, they
Speaker 3: crashed it as soon as I got it. It was
Speaker 3: like five hundred and sixty two dollars for the payment.
Speaker 3: I was like twenty four years old.
Speaker 4: I was like, man, you were financing that car.
Speaker 3: I was like, well that's a lot. Yeah, I said,
Speaker 3: that's a lot. But you know what let's just go
Speaker 3: for it. And like you said, we was cruising it.
Speaker 3: It was a nice car and year four or five,
Speaker 3: like those BMW's, they had just changed the body. It
Speaker 3: was like two thousand and four. It had just changed
Speaker 3: the body. I got in two thousand and six, and
Speaker 3: every time something was wrong in the car, like it
Speaker 3: was the center would go off and censors would go off.
Speaker 3: I was just like, this is just getting annoying. And
Speaker 3: every time you fix the sensor it was like three
Speaker 3: hundred sixty dollars. I was like, this is crazy. Finally
Speaker 3: I paid it off. It was like twenty twelve, and
Speaker 3: I'm like, what am I gonna do with this car?
Speaker 3: Like it was a fifty thousand dollars car. I looked
Speaker 3: at the value of it because I was driving it everywhere.
Speaker 3: The miles was crazy.
Speaker 2: I was.
Speaker 3: They were like, we'll give you six thousand dollars for
Speaker 3: this thing, and I was like what right after six
Speaker 3: years of pain? And then like the parts, like I said,
Speaker 3: the parts themselves. Like that's one thing that I learned
Speaker 3: is like no matter how old the car is, the
Speaker 3: parts don't depreciate. So like if you bought it in
Speaker 3: nineteen eighty six, and you need new parts. The parts
Speaker 3: still cost the same, and I was like, you know what,
Speaker 3: this is it man? And the final straw. My son
Speaker 3: was born and I had the BMW five twenty five.
Speaker 3: At that time, it was still coming in real world.
Speaker 3: They didn't have four wheel driving all the cars. And
Speaker 3: I was coming up the hell in my house and
Speaker 3: the car started rolling back. It was snowing aground and
Speaker 3: literally the third day, like, that's what you bring your
Speaker 3: kid home? And we like went into oncoming traffic and
Speaker 3: I was like, this is it.
Speaker 2: I'm done.
Speaker 3: I'm never driving his car again. I'm never buying a
Speaker 3: car again. That's the end of the story. And I
Speaker 3: literally walked them up the hill and left the car
Speaker 3: down the street. We never got back back in wild.
Speaker 2: So, yeah, so we're gonna go into the details of
Speaker 2: leasing versus buying. I'm gonna say it for my standpoint
Speaker 2: as far as owner before. But first I want to
Speaker 2: give you the floor, right, all right, So can we
Speaker 2: talk about the difference between leasing and buying a car?
Speaker 2: What are some key differences in leasing a car and
Speaker 2: buying a car?
Speaker 4: Well, on at least most people, you'll hear that a
Speaker 4: lot people say, well, you don't own the car, right,
Speaker 4: But the truth is, do you want to own a
Speaker 4: vehicle that's going to lose value?
Speaker 2: Right?
Speaker 4: Very rarely do cars go up in value. So that's
Speaker 4: why leasing is so prevalent, seventy eighty percent, Like you said,
Speaker 4: of people lease the vehicles. When you're financing the vehicle,
Speaker 4: you do, you technically own it, but the bank owns
Speaker 4: it while you're financing. So until you pay it off,
Speaker 4: the vehicle still belongs to the bank title the titles
Speaker 4: held by the bank. You're not the owner of that vehicle.
Speaker 2: That's something that's that's a common misconception. You don't own
Speaker 2: a car the way until you finally pay it off.
Speaker 2: And then when you do pay it off, most people
Speaker 2: want to trade it in.
Speaker 4: They want to trade it right away old by the
Speaker 4: time you own it now.
Speaker 2: It's old exactly. But another thing with the leasing that
Speaker 2: people don't fully understand is like for me personally, right,
Speaker 2: the reason why at least is that I'm a business owner, right,
Speaker 2: so I get better tax treatment for least in the car.
Speaker 2: Whereas like with the least I can write off the insurance,
Speaker 2: the gas and the least payment formula percentage, we won't
Speaker 2: get too complicated in it. But I can write that
Speaker 2: off on my taxes. If I own the car, then
Speaker 2: I could only have to go a by the depreciation
Speaker 2: because it's a own I get less of a tax
Speaker 2: benefit for owning a car, So it's in my benefit
Speaker 2: to lease the car because it's pretty much a write
Speaker 2: off for me, and I don't have to worry about maintenance. Right,
Speaker 2: So I never haven't gotten I haven't paid for oil
Speaker 2: change and I can't remember when because all least everything
Speaker 2: is paid for, yes, and then I get a new
Speaker 2: car every three years. It's not I always sell, like
Speaker 2: if you want to. Everybody's personal preference is different. You
Speaker 2: can't foreshew views on somebody, right, Like if you want
Speaker 2: to keep a car for ten years, that shit right,
Speaker 2: you can do that. I don't want to do that.
Speaker 2: I want a new car. So I know it's going
Speaker 2: to cost me a lot more money to buy a
Speaker 2: car and then buy a new car every three years
Speaker 2: as opposed to leasing a car and then getting a
Speaker 2: new car every three years. And the upper front is
Speaker 2: less yep, right.
Speaker 4: Yeah, absolutely yeah. On a lease, you only pay let's
Speaker 4: say the taxes right when you're financing in the vehicle
Speaker 4: you pay tax on the whole price of the car,
Speaker 4: or on a lease you only pay tax and let's
Speaker 4: say the monthly payment. Depending on the state and where
Speaker 4: you're registering the car, Let's say like New York, you're
Speaker 4: only paying tax on the monthly payment.
Speaker 2: Right. So I think that that's something that people could
Speaker 2: And as far as for me, I don't drive a lot,
Speaker 2: so twelve thousand miles. I never go with twelve thousand miles.
Speaker 2: I usually hit like eleven ten to five, So it's
Speaker 2: perfect for me. But you were saying, even if you
Speaker 2: do go with twelve thousand.
Speaker 4: That's a big misconception. Also, it's a lot of people
Speaker 4: think that if I drive a lot of mileage, I
Speaker 4: shouldn't be leasing.
Speaker 2: You know.
Speaker 4: You hear a lot of people come in and they say,
Speaker 4: you know, I do fifteen twenty thousand miles a year,
Speaker 4: I shouldn't you know? Leasing is not for me. I
Speaker 4: think the contrary. The way I look at it is
Speaker 4: when you're leasing the vehicle, even if it's a high mileage,
Speaker 4: least you know your true cost of ownership, Like you said,
Speaker 4: with maintenance, right, you know that you're gonna have this
Speaker 4: car three years you're gonna put fifteen thousand miles a year,
Speaker 4: you'll have forty five thousand miles. Most warranties are let's say,
Speaker 4: four year, fifty thousand mile bumper to bump a warranty,
Speaker 4: so you'll still covered under your warranty, you see what
Speaker 4: I mean. So you'll be able to look at it
Speaker 4: and say, hey, you know what, I know exactly what
Speaker 4: I'm gonna be paying every month for this car as
Speaker 4: long as I have my lease. Now, when you're financing
Speaker 4: a car and you're putting high mileage on the car,
Speaker 4: the two things that lower the value of the car
Speaker 4: quickest is the amount of milege you put on it
Speaker 4: and the condition of the car. So let's save the
Speaker 4: vehicle was in an accident. So if I'm leasing my
Speaker 4: car and someone that my next door neighbors buying their
Speaker 4: vehicle and they're financing their car in three years, I
Speaker 4: have a lot more flexibility of what I can do.
Speaker 4: I don't have to worry about if my car was
Speaker 4: in an accident or you know, does somebody key my car?
Speaker 4: Did a garbage truck come down the street to hit
Speaker 4: my car? Because their value is dropped now, So now
Speaker 4: you're playing this guessing game of well, wait a minute,
Speaker 4: what is my car now worth? And you run into
Speaker 4: a situation where you finally pay off your car. You
Speaker 4: put money into the vehicle trying to fix it, and
Speaker 4: they turn around to hey, your cards worth six thousand dollars.
Speaker 2: Now.
Speaker 4: The other thing that we talked about was that technology
Speaker 4: is moving so fast, so things get antiquated quick. So
Speaker 4: that's why leasing is nice because in three years you
Speaker 4: may not need a small sedan right now, In three years,
Speaker 4: your life changes. You have a family, you have kids.
Speaker 4: Now I want to suv. My lease is up. I
Speaker 4: come out of the lising, I go into the brand
Speaker 4: new suv if I want can't fit quarding anymore?
Speaker 2: Exactly.
Speaker 3: Yeah, Now that's true. Technology changes even like the few
Speaker 3: if I have now, like I saw the two twenty
Speaker 3: twenty mode, I'm like, wait, yeah, that is ridiculous, Like
Speaker 3: I need that technology now. So it's like you can
Speaker 3: just come in every three years. Man, that's a that's
Speaker 3: a huge benefit in leasing. One of the things that
Speaker 3: is important when you're lease in all finances is the
Speaker 3: credit Yep, how does that work? Is there a specific
Speaker 3: bureau that car dealerships use, or the bank.
Speaker 4: So it varies between manufacturers, so different banks. So let's say,
Speaker 4: if you're going to Honda Honda Financial, Toyota has Toyota
Speaker 4: Motive Credit, Mercedes Benz has Mercedes Benz Financial. They all
Speaker 4: have different criterias, right, So it's not a blanket as
Speaker 4: far as what they use. Some people use transunions, some
Speaker 4: people use echo facts. Other manufacturers use what's called an autoscore.
Speaker 4: So an autoscore means your automotive history. So even if
Speaker 4: you had some trouble on your credit, but they saw,
Speaker 4: let's say, for whatever reason, you had some medical bills
Speaker 4: or something happened, but you always paid your car node
Speaker 4: on time. The bank may look at that and say, hey,
Speaker 4: well wait a minute, they missed some payments over here,
Speaker 4: but they always paid their car on time. So that
Speaker 4: means that, hey, you know what, this person needs that car.
Speaker 4: They need to get to work, they need to provide
Speaker 4: for their family. So no matter what happens, they're going
Speaker 4: to take care of that monthly payment.
Speaker 2: And another thing I want people to think too. A
Speaker 2: lot of times people will look at it like, okay, well,
Speaker 2: I'm not a business owner and we're talking about luxury cars.
Speaker 2: Just because we have luxury cars, but it's the conversations
Speaker 2: for any type of cass it doesn't matter. But also
Speaker 2: people have to realize is that you don't have to
Speaker 2: be a full time entrepreneur to be an entrepreneur because
Speaker 2: the tax system. I can't stress this up. The tax
Speaker 2: system is set up for entrepreneur and investors. It's not
Speaker 2: set up for employees. Right, So as an entrepreneur, you
Speaker 2: get all kinds of benefits. You can write off meals,
Speaker 2: you can write off travel, you can write off almost
Speaker 2: anything realistically as long as it makes sense. Don't get
Speaker 2: order and cars is one of the things that you
Speaker 2: can write off. Right. So if you work in a
Speaker 2: regular job and you might have a side hustle, why
Speaker 2: not get that incorporated, get an LLC, get a sea court,
Speaker 2: whatever you want to do, and get a tax id,
Speaker 2: opening up bank account. Now you have a business. So
Speaker 2: now you can lease that from your side hustle business,
Speaker 2: and you can deduct the same deductions like if you
Speaker 2: work the regular job. Right, Like now that that goes
Speaker 2: against any money that you make on that end. So
Speaker 2: I say that to say we have to think like
Speaker 2: business people and you don't even have to actually be
Speaker 2: a full time business owner salespeople as well. Right if
Speaker 2: you're a ten ninety nine or if you are in
Speaker 2: some form of sales where you can take deductions like
Speaker 2: real estate, stuff like that, insurance you show insurance the
Speaker 2: same thing. So a lot of times people you know
Speaker 2: they have negative views towards things because they don't they
Speaker 2: have a lack of understanding it. Once you have a
Speaker 2: lack of understanding.
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Speaker 2: And like I said, now, if you still choose to
Speaker 2: do that, then it's your decision. It's free country. But
Speaker 2: a lot of times if you make decisions based out
Speaker 2: of ignorance not knowledge, right exactly. So one of the
Speaker 2: things I want to ask you was you said MSRP
Speaker 2: versus price, right, what's the difference?
Speaker 4: It's selling price, all right? So yeah, so you have MSRP. Right,
Speaker 4: that's what's on the windowsticker, right, So the manufacturer suggests
Speaker 4: the retail price of the vehicle. That's MSRP. Manufacturer suggests
Speaker 4: the retail price. That's what they recommend you should be
Speaker 4: selling that car for now. The selling price is what
Speaker 4: you negotiate, right or whatever. However you can reduce the
Speaker 4: selling price of the vehicle. That's what that comes down to.
Speaker 3: Is that the same thing as a cap cost.
Speaker 4: So no cap cost. Let's say you're leasing or your
Speaker 4: finance in the vehicle. The final cap cost is the
Speaker 4: selling price plus anything else. So whatever money the bank
Speaker 4: is lending you, whatever it so least or finance, they're
Speaker 4: still lending a certain amount of money. So let's sayd
Speaker 4: the lease, if you rolled your taxes into your payment,
Speaker 4: that's going to add to your cap cost. If you
Speaker 4: negotiated a fifty thousand dollars selling price and then you
Speaker 4: rolled your taxes of two thousand dollars into the lease,
Speaker 4: that's fifty two thousand dollars cap cost. And is that negotiable. Well,
Speaker 4: it's based on what you negotiate as far as you
Speaker 4: let's say you're selling price. So whatever fees you put
Speaker 4: into it, those aren't negotiable. Those let's say taxes and
Speaker 4: DMV fees, things like that.
Speaker 2: So all right, we talked about okay, talk about leasing
Speaker 2: a car, but buying a car. Somebody wants to buy
Speaker 2: a car, right, and you were saying most of the time,
Speaker 2: if you do want to buy a car, it it
Speaker 2: makes more sense to buy a used cost.
Speaker 4: I always recommend people, if you are going to buy
Speaker 4: a car, buy a certified prince. Now, listen, there's vehicles
Speaker 4: you can find out these lots that are not authorized,
Speaker 4: let say Mercedes Benz dealerships or Toyota dealership. Me personally,
Speaker 4: I think you're better off going to You may pay
Speaker 4: a couple of dollars more, but you're getting it from
Speaker 4: the manufacturer, so you have the backing of manufacturers. Just
Speaker 4: give you an idea. Most companies, when they certify a vehicle,
Speaker 4: the vehicle goes through let's say, you know, one hundred
Speaker 4: and fifty pointe hundred and sixty point inspection. So not
Speaker 4: only will they inspect the vehicle to make sure that
Speaker 4: it's in certain conditions, so they'll eliminate things like let's
Speaker 4: say this frame damage to the car. If the car
Speaker 4: is frame damage doesn't qualify for certification, so it's eliminated.
Speaker 4: Most dealerships won't even take that car. They'll send that
Speaker 4: car out. And that's what you'll see the vehicles on
Speaker 4: these other side lots, right, and they're selling those vehicles.
Speaker 4: So there's really no recourse when it comes to something
Speaker 4: happened to the car. Not to mention the fact that
Speaker 4: once that car goes through the certification, a lot of
Speaker 4: manufacturers will put new car interest rates on those cars.
Speaker 4: So typically pre owned cars or used cars will have
Speaker 4: a higher interest rate than a new car. But if
Speaker 4: it's certified, you get a better interest rate. So like
Speaker 4: right now, like let's say you have one point nine
Speaker 4: nine percent, you can't get one nine nine percent on
Speaker 4: a used car, you know, anywhere else, you know what
Speaker 4: I mean, If the vehicle's certified, that's the way to
Speaker 4: do it. Me personally, the vehicles, as you guys have
Speaker 4: all heard this, people say, oh, well, the vehicle loses
Speaker 4: value as soon as you drive it off the lot.
Speaker 4: Now what happens is really it's once it's registered the
Speaker 4: vehicle loses value. That's when that's when the vehicle loses value.
Speaker 4: That's normally when you're driving off the lot.
Speaker 3: That's when you got it brand new.
Speaker 4: So yeah, when you're buying a car brand new, it
Speaker 4: initially loses its value when you drive it off a
Speaker 4: lot or the vehicle is titled. So now you're buying
Speaker 4: a vehicle, who's going to that's going to depreciate in value.
Speaker 4: That's what a car does. It's going to go down
Speaker 4: in value. So you're financing a car that's losing value.
Speaker 4: It already took a big hit right when you're buying
Speaker 4: new opposed to a certified pre own that the initial
Speaker 4: depreciation has already happened. It's already taking place that you
Speaker 4: knew that car was taking care of the manufacturer. The dealership,
Speaker 4: you know, is putting themselves behind that vehicle, saying, hey,
Speaker 4: we know this vehicle, We've inspected this vehicle, we know
Speaker 4: this vehicle's in good shape. We're willing to even put
Speaker 4: a new car rate on it. So you have some
Speaker 4: more confidence when they're buying that type of vehicle. Okay,
Speaker 4: all right.
Speaker 3: There was another thing that we saw when we were
Speaker 3: reading it was gap insurance. Now that's something that doesn't
Speaker 3: come on a finance, but it does come on the lease.
Speaker 4: Yeah, New York State leases all have gap insurance. Now
Speaker 4: what happens. People don't realize that if a vehicle is
Speaker 4: let's say total or stolen, any negative equity. So if
Speaker 4: your insurance company says, hey, your car was worth ten
Speaker 4: thousand dollars, but you owe the bank twelve or thirteen.
Speaker 4: Without gap insurance, you're responsible for that negative equity. Okay,
Speaker 4: you're a negative balance, you're responsible for that amount. So
Speaker 4: that's why all New York State leases will have gap insurance.
Speaker 2: All right, So for people that go into the dealership
Speaker 2: and they don't really know what questions. It's iluent to
Speaker 2: me because you don't really know if you're gett ripped
Speaker 2: off or not. You just call me, So like what
Speaker 2: questions should they ask? Like, how do you know if
Speaker 2: you're getting a good deal? How can you get the
Speaker 2: best deal? Everything negotiable, everything's negotiable, So how can you
Speaker 2: get the best deal?
Speaker 4: So here's what it is I mean, and it's the
Speaker 4: car business has this bad reputation, right, sometimes we make
Speaker 4: it harder than it has to be as a consumer. Now,
Speaker 4: if you know there's a vehicle you want, there's so
Speaker 4: much information out there. You can go online, you can
Speaker 4: do research, you can find out what the cost of
Speaker 4: the vehicle is. But at the end of the day,
Speaker 4: I always recommend trying to buy local. Try to buy
Speaker 4: where you're going to be servicing your vehicle and they
Speaker 4: want to take care of you when you have a problem. Yes,
Speaker 4: you can go to any matter of fact, you can
Speaker 4: go to any dealership and try to get help or
Speaker 4: have your vehicle serviced. But a lot of times when
Speaker 4: you buy local, they have more of an interest in
Speaker 4: taking care of you because you know what you purchase
Speaker 4: from them, They're going to take care of you first.
Speaker 2: Right.
Speaker 4: If you came to my dealership and you bought the
Speaker 4: car in Jersey, right, or another dealership, but another customer
Speaker 4: came in and he bought his car here, who would
Speaker 4: you expect me to take care of better?
Speaker 2: Or first? Right?
Speaker 4: If I have one loaner car left, I'm going to
Speaker 4: give it to the guy who's little to me and
Speaker 4: he say he's buying cars. As far as the price goes, listen,
Speaker 4: there's a lot of information online.
Speaker 2: You can go.
Speaker 4: You can look up what the costs of the vehicles are.
Speaker 4: I do reckon Comen. Listen. You want to shop around,
Speaker 4: but at the end of the day, once you have
Speaker 4: a bottom line number, go into your local dealership say hey,
Speaker 4: this is what I got. Can you guys match it,
Speaker 4: get close to it, beat it, whatever it is.
Speaker 3: What sites do you recommend, like Kelly Bluebook or.
Speaker 4: Kelly Bluebook's great. You know, there's a lot offormation. If
Speaker 4: you go to Google, you can search, you know, car gurus,
Speaker 4: they'll give you all types of information.
Speaker 2: What about what's the residual value? All right?
Speaker 4: Residual values what the bank? The bank sets what's called
Speaker 4: the residual value. A residual value is the estimated value
Speaker 4: of the vehicle at the end of the lease. Okay,
Speaker 4: so that's what the bank is assuming or hoping that
Speaker 4: the vehicle is going to be worth once your lease
Speaker 4: is over. Now, that's determined by the mileage, right, how
Speaker 4: many miles. The less miles you put on a car,
Speaker 4: the higher residual value is going to be a good.
Speaker 4: Thing about the residual is that you want to have
Speaker 4: a high residual value. The higher the residual value means
Speaker 4: that the vehicle is going to depreciate less. So you're
Speaker 4: paying a smaller monthly payment because your monthly payment is
Speaker 4: based on the depreciation. Okay, So let's give you mathematics. Right,
Speaker 4: If the car has a selling price, let's say fifty
Speaker 4: thousand dollars, Right, Let's say's an MSRP of fifty thousand dollars,
Speaker 4: just to use round numbers, and the residual value is
Speaker 4: fifty percent, So it's twenty five thousand dollars. It's what
Speaker 4: the vehicle's going to be estimated to be worth at
Speaker 4: the end of the lease. Right, So you're going to
Speaker 4: pay that difference between the fifty thousand and the twenty
Speaker 4: five thousand, that's depreciation. But let's just say you just
Speaker 4: negotiated your price down to forty five thousand, So now
Speaker 4: you're shrinking the depreciation because it's between forty five and
Speaker 4: twenty five a post to the forty five and fifty,
Speaker 4: so you're paying on that depreciation. Do you know what
Speaker 4: I mean?
Speaker 2: Okay? And what about the cap reduction? All right?
Speaker 4: Cap cost reduction, that's the money down. That's what your
Speaker 4: initial investment to bring your payments down. So you'll see
Speaker 4: a lot of times people come in they say, well,
Speaker 4: I saw an ad that said three forty nine a month,
Speaker 4: but in that fine print it said thirty two ninety
Speaker 4: nine cap cost reduction or money down. So a lot
Speaker 4: of times people come in they say, well, I don't
Speaker 4: want to put any money down. That means you're still
Speaker 4: giving your taxes, your first month's payment, your bank fee,
Speaker 4: your plates upfront. It's not mean doesn't mean you're not
Speaker 4: coming up with anything out of pocket. That just means
Speaker 4: you're not putting on a cap quest reduction. So to
Speaker 4: give you an idea, let's say in a thirty six
Speaker 4: month lease, one thousand dollars cap quest reduction is equivalent
Speaker 4: to roughly thirty dollars in your monthly payment. So if
Speaker 4: you're at you know, let's say four, you're at four
Speaker 4: to fifty a month, and you want to get down
Speaker 4: to four to twenty, you put a next thousand dollars
Speaker 4: down to get you done to that monthly payment after
Speaker 4: you've negotiated your best deal. Now, some people are opposed
Speaker 4: to putting money down. It's all a personal preference. Some people,
Speaker 4: let let's say they know they want this particular car,
Speaker 4: and maybe their company gives them an allowance for their vehicle,
Speaker 4: or they just want to keep the payment below a
Speaker 4: certain budget because they want to you know, work their
Speaker 4: numbers in there for their monthly payments, right, they may
Speaker 4: put that money down. Me personally, I don't put money
Speaker 4: down on the lease because I'm okay with my monthly
Speaker 4: payment and I'd rather have the money in my pocket.
Speaker 4: That's the way I think.
Speaker 3: And sometimes the dealerships have things built in, right, specials
Speaker 3: like that, Like.
Speaker 4: Yeah, there are specials where they have incentives from the
Speaker 4: manufacturer if they're trying to move particular products. You know,
Speaker 4: some people come in and say, well, wait a minute,
Speaker 4: why is this car fifty five thousand dollars and this
Speaker 4: car is fifty five thousand dollars. Let's say two differ
Speaker 4: and bran to different models, right, Or maybe an SUV
Speaker 4: wants a sedan and the prices are different, right. And
Speaker 4: what happens is we may have a lot more sedans
Speaker 4: in inventory and there's not a lot of these SUVs around.
Speaker 4: Everybody's buying SUVs. So the manufacturer says, hey, let's help
Speaker 4: the dealership move these vehicles by putting additional incentives on
Speaker 4: it so they're payment below.
Speaker 3: Is that specific time of year that that happens like
Speaker 3: I always see, like it's like a summer sale or winter.
Speaker 4: Every manufacturer has different sales events, like let's just say
Speaker 4: from Mercedes normally, then the end of the year is
Speaker 4: a big time. Also in June and July you'll see
Speaker 4: some nice sales events. But the way I look at it,
Speaker 4: it's all based on what you need, right, Depending on
Speaker 4: when you need your car is when you want to
Speaker 4: work your best deal. Do the payments fluctuate to a
Speaker 4: point where it's hundreds of dollars difference between those sales events?
Speaker 4: Not necessarily Normally it's a thirty forty fifty dollars difference
Speaker 4: in the monthly payment. So if you need a car, listen,
Speaker 4: you want to go into the dealership. You want to
Speaker 4: build a good relationship with your dealership, and if you
Speaker 4: spend some time work the deal obviously make sure that
Speaker 4: you're there for a reason. A lot of times people
Speaker 4: come in they go, you know what, just give me
Speaker 4: your best price. I'm leaving that. That makes it a
Speaker 4: little bit more difficult, And I get it.
Speaker 2: I get it.
Speaker 4: People get focused as far as the numbers go. I
Speaker 4: totally understand it. You want, but my thing is this,
Speaker 4: we want to give people great deals. We want you
Speaker 4: to buy cars. Right, It's not about the car business
Speaker 4: has this you know persona of being like, oh, they're
Speaker 4: gonna rip me off. That's not the case anymore. Listen.
Speaker 4: I'm sure there are people out there who take advantage
Speaker 4: of people, but that's not the case. And most highline dealerships,
Speaker 4: al most you know mom and pop, you know organizations
Speaker 4: where they really love to take care of people.
Speaker 2: And then you could buy a car at the end
Speaker 2: of the lease, right if you want.
Speaker 4: Now, you can buy your vehicle out at the end
Speaker 4: of the lease. That's one thing people ask me a lot. Look,
Speaker 4: I want to lease this car and I want to
Speaker 4: buy it.
Speaker 3: That was a big fun right went out least with
Speaker 3: the option to buy.
Speaker 4: So my thing is this, if you're going to buy
Speaker 4: the car, buy the car now, all right. Now, here's
Speaker 4: the thing. We go back to that residual value. You
Speaker 4: want that residual value to be high. You almost want
Speaker 4: it to be unrealistically high, because that means your monthly
Speaker 4: payment on you're going to your lease is going to
Speaker 4: be lower. Now here's the thing. Now, at the end
Speaker 4: of the lease, all of sudden you say, well I'm
Speaker 4: gonna buy it. You're buying it at that very high
Speaker 4: residual value. You have the option to buy it at
Speaker 4: that price. Okay, So now you're basically any savings that
Speaker 4: you took advantage of because that residual value is high,
Speaker 4: you're basically giving it right.
Speaker 2: Back to the bank. That's the other thing too, as
Speaker 2: far as with leasing a car, the monthly payments are
Speaker 2: usually lower than if you buy that.
Speaker 4: Yeah, call normally.
Speaker 2: That's another thing people have to understand too. It's like
Speaker 2: it's okay not to own everything. For me personally, I
Speaker 2: don't necessarily want to own a car. Because I'm gonna
Speaker 2: lose money on it, right, So I don't want to
Speaker 2: own something that I'm gonna lose value in. So that's
Speaker 2: like owning a house that you know is going to
Speaker 2: go down and value of what's the point of owning it.
Speaker 4: I'd rather in it.
Speaker 2: I have to have somewhere to live. I don't want
Speaker 2: to own a house where I know if I'm gonna
Speaker 2: pay one hundred thousand and then ten years it's gonna
Speaker 2: be worth twenty thousand.
Speaker 4: Well that's what I tell people. If let's say there's
Speaker 4: an area that you want to live in. Well, for
Speaker 4: whatever reason, the views or whatever is, the schools, whatever
Speaker 4: it keeps, you want to live there. But let's say
Speaker 4: the real estate agent said, hey, great news. This house
Speaker 4: is x amount of this apartment is X amount of dollars,
Speaker 4: and every year it's going to go down in value.
Speaker 4: You're gonna say, well, wait a minute, I don't why
Speaker 4: what I buy that that you better? You're better off
Speaker 4: renting it, right, you say, listen, I want to live
Speaker 4: here for three years, but guess what in three years
Speaker 4: from now, I want to go move to the suburbs.
Speaker 4: You know, I like the views where I am but
Speaker 4: I can't see myself raising a family here, right, you'd
Speaker 4: rather rent that apartment, And renting is like that that
Speaker 4: that case, like, it's like leasing where you have the
Speaker 4: option to walk away from it at the end of
Speaker 4: those three years.
Speaker 3: Now, there's something called a lease end calls. That's like
Speaker 3: something that's like a hidden court that I actually found
Speaker 3: out about. So like, if I have a Mercedes and
Speaker 3: I lease it, but at the end of the lease,
Speaker 3: I decide, you know what, I want to go to BMW.
Speaker 4: There's a price for that. So they have what's called
Speaker 4: the disposition fee. All right, there's basically a fee to
Speaker 4: turn in the vehicle. Now, here's the thing. If you
Speaker 4: go with another BMW, a lot of times they'll just
Speaker 4: wave that fee. Right Now, there is a reason why
Speaker 4: they charge it. It's not just a penalty for leaving
Speaker 4: the brand. They have to keep in mind, once you
Speaker 4: surrender that vehicle, they have to pick up that vehicle,
Speaker 4: they have to condition it for resale, so things like
Speaker 4: that that they go through this paperwork that has to
Speaker 4: be processed in order to do it. And obviously it
Speaker 4: does give you some sort of incentive to stay with
Speaker 4: the brand.
Speaker 3: Right, So if I say, there's that course, obviously they
Speaker 3: waved that for you.
Speaker 4: Most manufacturers wave.
Speaker 2: I learned that. I didn't know that. I learned that
Speaker 2: when I was trade my car.
Speaker 4: Yeah, that's why I have to stay with Mercedan.
Speaker 3: Were trying, man, we are trying.
Speaker 2: I got But before we go, I have one other question.
Speaker 2: I just saw recently online where somebody said that they
Speaker 2: they sold their car back to a dealership after they
Speaker 2: leased it. How does that? How does that work?
Speaker 3: With that?
Speaker 4: So very rarely does it happen where the vehicle has
Speaker 4: a higher value than the residual value. Okay, so let's
Speaker 4: say the visual value, like we talked about twenty five thousand,
Speaker 4: the guy kept it in great shape. You hardly drove it.
Speaker 4: You want to put minimum knowledge on the vehicle. Car's
Speaker 4: garage keptain. All of a sudden, for some reason, there's
Speaker 4: a there's a high demand for that particular vehicle. Let's
Speaker 4: say this thirty thousand dollars actually the book value for
Speaker 4: that car, and he was twenty five. He can turn
Speaker 4: out to the dealers and said, hey, I know my
Speaker 4: buyout is X amount of dollars. Would you be willing
Speaker 4: to buy that car from me? In order for me
Speaker 4: to trade.
Speaker 2: It back to you.
Speaker 4: Now they have some money that they could put towards
Speaker 4: another vehicle. Also, yeah, said.
Speaker 2: That, No, it was it was Matthew knows.
Speaker 3: Oh, and that pulled the t pain bought the one million.
Speaker 2: He didn't. He lost. He lost thousand.
Speaker 3: He blew the engine or something like that, and he
Speaker 3: sold it back to the dealership. He lost one thousand.
Speaker 2: Other years, well, he brought the car and then sold
Speaker 2: it six months later.
Speaker 4: Yeah, I mean, it's rare that that happens, you know,
Speaker 4: Like I said, cars are depreciating assets. It's very rare
Speaker 4: that that'll happen. My graduates from my school being forced bad.
Speaker 2: Drop bag drop Mike, drop bag drop drop.
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