Is Leasing a Car Better than Buying a Car?

“So leasing a car is better than buying a car?” was a question asked to me on Twitter.

The answer is that, just as with houses, it depends on who you are and what you’re doing.

So we’ve made this handy dandy guide to figure out where you fit.

Who am I

If you have consumer debt:

A. Are you trying to get out of debt and build wealth? Buy a Honda, Toyota or Nissan that costs no more than $12k, IN CASH, and with no more than 15k miles for every year that car is old.

Ie. A 5 year old car shouldn’t have more than 75k miles on the odometer.

Oh you don’t have $12k in cash? How much do you have, $4k? Now you know what you can afford.

Oh you have nothing? Sacrifice until you get something. Do not buy things you can not afford. We use double negative sentences when referencing double negative net worths.

B. Are you trying to stay in debt and look rich vs actually be rich? Then keep doin what you’re doin playa. What do you need us for? Buy/lease/go into debt for whatever you want and make sure to have those interest payments each month. You’ll learn. I take that back – you should really aim to go in debt for a $75k Tesla. I own stock in that company – feel free to help me to help me.

(B*tch better have my… interest payments.)

If you’re OUT of consumer debt, but you have other debt to pay (ie. student loans/mortgage left):

A. Do you drive unreliable cars for 10-15 years and want to stop spending a fortune? Lease by using the “single pay lease” method we discuss here.

B. Do you drive RELIABLE cars for 10-15 years? Buy new or used using the money you have in the bank. Oh you don’t have enough money for a new car? Then now you know what you can afford. Do not add new debt while trying to get out of debt. Yes student loans and mortgages are still “bad debt”.

If you’re out of ALL debt:

**You can do whatever the hell it is you want as long as its part of your own individual financial strategy and it doesn’t get you BACK into debt.**

A. Do you want a higher cash flow each month to use for investing? Lease (by paying the whole term in full) and invest the huge difference.

B. Do you want cars owned outright because you like to work on cars etc? Buy whatever car and understand because your cash is tied up in that $45k car, you’ll be able to invest less.

But understand, – if you have monthly payments on any contract – lease, finance or otherwise; that becomes debt owed.

*Note 1: The best transportation for those in urban areas is to centrally locate yourself near work and school then use a combination of public transportation, personal transportation (bikes/shoes) while keeping a paid for reliable clunker parked outside for emergencies (or if you really know how to work the system, Uber is great in an emergency as well). You will pay more in rent but not be stuck on freeways, be healthier and you’ll also not pay hardly ANY of the $832/month most people pay on maintaining recent model automobiles.

*Note 2: The word “Better” in terms of the BKF program depends on what phase you’re in. Are you paying off debt? “Better” is in reference to what costs less. If you’re trying to build wealth, “Better” is in reference to whatever the hell your overall plan is. Do you want cashflow? No worries? You like working on cars? Remember, your better is not everyone’s better.

I hope that settles that.

Don’t worry, you can start again back at the top. 
Continue reading “Is Leasing a Car Better than Buying a Car?”

How to lease a car without worrying about a credit score (negotiating a car lease like a Tiger)


First, the prerequisites for this lesson that you should have learned from the first 4 car leasing pro tips.

Pro Tip #1: You are not to ever pay anything monthly – especially not a lease. You are living a cash only, no debt, high investment return lifestyle. This is how you live a life away from brokeness. What we’re teaching here is not how to negotiate monthly payments but how to not have ANY monthly payments. We lease by paying the lease in FULL.

As well, you should NOT be driving a new ANYTHING while you are in consumer debt (all debt aside from student loans/mortgages). Leasing is not debt. However, leasing is slightly more expensive than other options and is a privilege for those no longer in a “save money” phase such as debt elimination. This is for those on a wealth building phase. Learn the difference between the phases and the importance of placing a monetary value on “no longer having to worry about auto mechanical issues”.

Pro Tip #2: You should filter out all cars you’re contemplating leasing first by they’re residual value (must be over 60% residual for 36 months), by calling/visiting dealers or using sites like . Then out of those cars, figure which you like, how costly it is to maintain (some luxury car dealers like Audi have no maintenance plans and you have to pay for this so your warranty doesnt void), the money factor that will be included in the lease deal and finally the overall price of the car (which I will slap you if you do not negotiate to a couple hundred over invoice. Yes you want dealers to make money).

Pro Tip #3: Know what you came to do and do it. Don’t you dare lease a car for over 36 months or buy it/plan to buy it at the end of a lease. I have your address. (and never lease a honda or toyota. The whole point is not to have to worry. A used honda is a new honda. It will last forever.)

Pro Tip #4: One of the smartest things you can ever do as a person who is about to buy or lease a car, is to use and live with that car (or similar) for a week before signing on the dotted line.

There is nothing a 7 minute test drive will teach you about any car.

Always rent the car for a few days/a week BEFORE you lease, buy or anything related to this. You may think you’re wasting money but trust me son, this will save you THOUSANDS. Again, use to rent a similar car to the one you’re planning to lease, Hertz car sales or whatever dealership you’re shopping at may also have a loaner program for serious potential buyers only.

Now you’re ready to figure out how to negotiate a lease (Pro Tip #5).

Pro Tip #5: How to lease a car without worrying about a credit score (negotiating a car lease like a Tiger)

**Step 1: DO NOT NEGOTIATE A LEASE BASED ON YOUR CREDIT REPORT. EVER. This is the number 1 new booty mistake and dealers can tell who you are if the first thing they say is lets see how your credit is and you say “ok”. I don’t care if you feel you have an 850 FICO, credit scores and credit reports only matter for two people – A. those who are bad at negotiating and B. those who are broke enough to need credit for the things they are interested in.

Though your goal is no monthly bills – ever, play up the dealer as if you are a typical broke person needing to pay the lease monthly. They should not know that you’re paying the lease in full. Tell them you’re too smart to run your credit at multiple locations (and you are indeed pricing out cars at multiple locations – make sure they know this). Tell them you qualify for Tier 1 financing (or Tier 1 + if at a Toyota or Lexus dealership) and that all numbers should be based on a 36 month lease, tier 1 credit & 12k miles/year.

The smartest thing you can do is base these negotiations off a national or local lease offer that these dealers use to get people in the showroom and then switch up the numbers on them.

And they will switch up the numbers and get just about everyone – but you.

**Step 2: Figure out how much power you have exactly and then figure out how to have more.

You should have ALL the power in any dealership negotiation while giving the appearance that the dealer has some as well. Still, the truth is they need you much more than you need them, never forget that. You are the way they pay their rent/mortgages. On the other hand, its just a car for you and you have options.

So how much power do you currently have?
-You have the cash to pay the ENTIRETY of the lease. This gives any dealer a hard-on, however, they are never to know this is your plan until the end.
-You have a car outside that runs perfectly and you are not trading it in. Make sure they know this. If you come in with a car story about how it just blew up or got stolen, they know they have you.
-As mentioned before, you have tier 1/tier 1 plus credit and can go to any dealership and get a car within seconds.

Now, how to have more power?
-Play their greed and sales quotas against them. The rumor is indeed true – if you go to a dealership at the end of a sales month, at the end of a quarter or during a big sales holiday weekend, they will jump quicker at lowball offers.
If you go inside a dealership during a combination of all three and on a car that holds its value, but for some reason they haven’t been able to move? You can basically drive it for at or even less than what the own dealership paid. For this you’d have to hire someone like me as this is a specialty trick few can do.

Otherwise, aim to pay a few hundred over dealer invoice. Find out the dealer invoice on

-Explain that you are deciding to pay the entire lease (called a single pay lease) and watch them salivate. But only do this at the end of the deal.
-Prepare to do the walk out trick. This works and works exquisitely well at the end of a sales month/quarter or holiday weekend. Make sure they have your cell phone number. Some dealers are stupid enough to let you walk, until their sales manager asks them what happened and forces them to call you.
-Bring someone who not only knows cars, car deals and who isnt broke but someone who knows car lease warfare!

**Step 3: Do the freakin math. Know that there will be a few scenarios you’re going to be hit with BEFORE you go into the dealership. If you havent done the math for these scenarios, after they present them to you, don’t feel obligated to answer right a way, tell them you need a moment alone.

Don’t overcomplicate the math either.

If a car with a $25k MSRP will be worth 60% of that price in 3 years (36 months), that means it will be worth $15k when you go to turn it in. Subtract $25k from $15k and you’ll essentially be paying for $10k worth of depreciation over those 36 months, plus tax, interest and fees.

$10k/36 months = $277/month.
$277 + 12% (tax, interest and fees) = $310.24

But remember – again, you aren’t paying MSRP, you’re paying a couple hundred over invoice. This means you’re really paying the depreciation of a $23k car becomming a $15k car. Using the same formula above that means you’re paying $248.88/month.

If you total up $248.88/month x 36 months, the total cost of that lease with all fees should be $8,959.68.

Do NOT use online lease calculators. They are for people who take what life gives them. Use a 12% rate and tell the dealer to sell it or suck it.

**Step 4: Check the credit & disclose the cash. Remember, all of this was being negotiated on tier 1 credit. And lets assume you have nothing but student loans on your credit report that have been paid for the last 3-5 years. You will indeed already have tier 1 credit.

Mortgage student loan

(ignore the mortgage part, leases work the same way)
However, lets assume you worked hard enough to avoid student loans and don’t have anything on your credit report – nothing positive or negative – nothing. Then you have a few options:
A. Lease through the business you started. This is what I do. You will pay a slightly higher rate (because thats how business financing works). Then you introduce the prepayment of the lease. And then you don’t pay a slightly higher rate – in fact a much lower rate.
B. Understand that the first lease will be the spark. You will take out the normal 36 month lease at a reasonable rate (since you are prepaying) and then you will sell that car before the lease ends, in 24 months. At this point your credit report will show a paid off lease and the world is yours. Go in for your next lease with nothing on your report but on time paid in full lease obligations (which arent debt).
C. Get a co-signer. And if you do this, I will post nude pictures of you online that i created from photoshop. You don’t need a co-signer, you need power. Cash is power.

Once the credit is pulled and the dealer understands that you are prepaying the lease (called a single pay lease), take the numbers you worked out initially, the total cost for 30 months of $8,959.69 and figure out how much money your money is worth to you as well as to them.

There are mathematical ways to figure this out but here is an easier way.
Would you feel comfortable with a $1500 discount for easing the leasing company’s concerns of someone walking away from a lease? Would you feel comfortable with a $2k discount?

Remember, you have the power. Play them until you cant play them anymore. If you have to walk at a $1300 discount and they don’t reach out to you, then you know that was the lowest offer possible. Or you could go to another dealer and compare offers.

Once the deal is settled, for lets say, $1300 off the lease for prepaying it, you will have paid the equivalent of $212.76/month to drive a $25k worry free car.

There are a few sideline things to negotiate like wear and tear, lease termination fees etc. But if you focus on the above, you will be a lease Jedi.

Any questions?

(*Note: Many people think this isnt possible but the truth is you can command these types of discounts with a clean credit report and a single pay lease option because you are risking the capital you lay out. Incase your leased car is totalled or stolen/unreturned, since you’ve laid out the cash, that cash is gone in one of those events. For this reason, leasing single pay is only for those who have strong enough cash positions to support this. Realize however, if you get a $2k discount on a lease, and your car was totalled during a lease in which you drove all but $5k of the car you prepayed, that loss would be more than paid for over a few years of leasing other cars. Imagine a leasing career of 20 cars or so getting a $2k discount on each? Or more should the cars be more expensive?)

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