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In the excerpt below, Retirement Insider Editor Bob Irish interviews Mark’s friend, Tony Martorano.
He’s a 35-year veteran of the auto industry. And he knows all the ways unwitting car buyers get bilked.
Below, Tony shows you how to determine if leasing is right for you. And how to negotiate the best deal…
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From Retirement Insider Editor Bob Irish in the Wealth Builders Club:
Bob: More Americans are leasing cars now than ever before. This year, about 27% of all new cars are leased. Does leasing make sense?
Tony: It depends on your needs. But here’s one way to look at it: To build wealth, you should be buying things that go up in value.
If, for example, you’re looking at a house you really want to live in, but you’re sure it’s going to substantially decrease in value, would you buy it… or would you rent it?
Bob: Rent it, obviously.
Tony: Of course you would. But most people don’t think of cars the same way. Let’s say you pay $100,000 in cash for a new car. As soon as you drive it off the lot, it depreciates, and you now have a car worth $75,000. So, you just lost $25,000.
Bob: What about classic cars? They tend to go up in value, right?
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Tony: Right. Classic cars are an exception. You might buy one for $40,000 and expect to be able to sell it for $50,000 someday.
But the average car doesn’t go up in value. It goes down.
Bob: Please give us some examples of when buying could make more sense.
Tony: Buying a car makes more sense if you plan to drive it until the wheels fall off. If you keep a car for a long time, your total expenses will be lower than if you lease.
Buying also makes sense if you plan to customize the car in any way. You can’t do that with a leased car. That’s because you’re required to return it in stock condition.
And if you drive a lot—say, over 12,000 miles per year—buying makes more sense because of the mileage penalties with leases.
Finally, people under 25 are often better off buying. Leasing companies require high insurance liability coverage. And that coverage is expensive for younger drivers.
Reeves’ Note: The full interview above is located in Wealth Stealers essay No. 12: “How to Play It Smart When Leasing a Car.” The “Wealth Stealers” essay series is one of the Wealth Builders Club’s most popular components. It focuses on the six main threats to wealth we all encounter in life—and how to avoid them.
In the Wealth Builders Club, Mark teaches you to use the exact same techniques he used to build his eight-figure net worth. The results are life changing. Click here to get started.