Paper Chase: Leasing A Car
August new home sales were up 5.7% exceeding analysts estimates. The economy expanded at an annual rate of 3.7% in the second quarter. It was not expected to grow at that rate for the 3rd quarter. GDP is closely watched as it is the broadest measure of the economy.
There will be no social security increase. The government bases cost of living adjustments on inflation which is too low to warrant a change. There were no changes in 2010 nor 2011 either.
Leasing A Car
Lease payments for cars are normally cheaper than loan payments per month which is why people generally get into leasing. This is not the only reason to get a lease.
There are important questions that should be asked before leasing a car. What is the base monthly payment? What is the excessive wear and use policy? What are the warranty details? What is the money factor? (The money factor is roughly equivalent to the interest rate when purchasing a car. It determines how much you’ll pay in finance charges each month during your lease.) Is there a purchase option at the end?
Mistakes you want to avoid making when leasing a car include paying too much money upfront, forgetting gap insurance, underestimating miles driven, not maintaining the car, and leasing for too long. These are when the advantages of buying become readily apparent. The ideal person to lease a car is someone who needs to minimize monthly car payments, owns a business that will make the monthly payments, drives less than 15,000 miles annually, typically wants a new car every 3 to 4 years, and wants an extended trial periods on cars that they like.
The best rout is to not have a monthly payment for anything. Your better off buying your car and paying it off upfront. I don’t need to go into how with interest payments and opportunity costs, having any recurring payment for a depreciating asset is not wise.
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