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Should I Buy or Lease That New Vehicle?

Updated: Aug 16, 2022

Welcome to the Redfish, Healthy, Wealthy, and Wise podcast. Our focus is to deliver information that helps you become healthy, wealthy, and wise. This podcast is sponsored by Redfish Capital Management, the views and opinions expressed here and do not necessarily represent the views and opinions of SCF securities, Inc, or any SCF related entity. This material is for general information only and is not intended [00:00:30] to provide specific advice or recommendations for any individual securities offer through SCF securities, Inc. Member FINRA, S I P C investment advisory services offered through SCF investment advisories Inc office at 1 55 east Shaw in Fresno, California, SCF securities, Inc, and Redfish Capital Management are independently owned and operated. SCF is not associated with other podcasts. And the messages contained within. Brad [00:01:00] Murrill and Redfish Capital does not offer legal or tax advice. This material is not intended to replace the advice of a qualified tax advisor or attorney please consult legal or tax professionals for specific information regarding your individual situation now for your host, Brad Murrill.

Hello everybody welcome to another episode of Redfish Healthy, Wealthy and Wise it is 12:45 on a Thursday afternoon and today is the 18th of November that's when I'm recording this I always like to put that on there because there's usually a couple days of lag time between when I record these podcasts and then sending it up to the producer getting it edited out correctly and then going through my compliance team to make sure everything I said it is OK to say and then I can post it for you little listen to so that's why I always do that today I wanted to discuss something that's been coming up in my office quite a bit you know I do two basic kinds of podcasts the first is the podcast that I do where I talk about what's going on in the markets in the economy I kind of called that before 11 and then I also do one that's more on financial planning business healthy well just and on a myriad of topics.

So when I was sitting down trying to determine what I would like to talk about this month what I tend to do is ask myself what are people asking me and what have I been talking about a lot and what I've been talking about a lot with folks recently is automobiles and cars and whether or not they should buy or they should lease in addition to that I also had to go through that process recently where I needed to buy two vehicles the first one was for my youngest son Jackson who is 18 and he did have a vehicle prior I bought him a Dodge Ram truck and this thing well let's put it this way when he turned into the neighborhood not my street not my driveway the neighborhood the dogs heads would pick up they knew Jackson was coming this thing was loud and it was beat up I'm not sure if it could go over 50 mph but it was a first vehicle and I wanted something that was rough and tumble and that it didn't cost I think I paid I'm not kidding I think I paid $2500 for it and maybe spent $1500 to get it ready so after almost two years this thing was falling apart literally we're talking glue duct tape whatever we can to keep it together and so finally I just said OK it's time he's going to be going off to College in the fall and this is not something I want him driving off to college I just don't think it's safe so I needed a new vehicle and at the same time my wife needed or wanted a different vehicle and she had held on hers for a long time so all that to say I go to the dealership and I'm sitting down and I bought Jackson a used truck out of a lot and then I bought my wife a new one so not a truck a car.

Anyway but I've had a lot of different people coming to me lately and asking about should I buy or should I lease and what are the financial ramifications so I thought this might be a fun little podcast to do today was talk about kind of the difference with those right now as you are aware or may not be aware it is hard to buy new vehicle and when I say hard it's because the supply and the demand out there as a result of being on the tail end of the COVID situation so all the factories shut down the transportation to get them down here and supply that's all been backed up so as a result what has happened is the most of the cars on the locks are used cars supply and demand of determine price so there was more demand in used cars than there was for new cars simply because you couldn't get them while the demand was saying but the supply was bigger so it shrunk the supply and so when the supply shrinks prices go up so there's not much of a difference right now in today's world between buying a new car and a used car so financially speaking it's going to be typically best to buy a new car if you can get your hands on one because the spread of the difference between new and used is not that big of a difference.

When you do buy a car just flat out by it and I'm going to talk about buying and leasing plus a new service that's becoming popular and is available now which is called a subscription service so with buying obviously you have to come up for the cash for it. If you don't if you're not going to pay for it in full then as you know you go through financing so you put down a down payment the difference with buying and leasing is at least in that down payment or the money that you put down that is equity because you are owning the vehicle so you can sell the vehicle at some point and get that money back out we're leasing is a little bit different is you don't own the vehicle you get to use it but you have to return it at the end of the lease unless you decide to buy it at that point so the upfront costs on a on a new car is cash down taxes registration and other fees now usually with leasing sometimes they'll put in the months first payment a security deposit acquisition fee taxes registr