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Enter Vehicle Depreciation Rates
If you do not know the residual value of a vehicle you are purchasing you can enter annual rates of depreciation in the table below. As you update depreciation it will automatically recalculate your ownership costs in the calculator on the first tab.
Current Fairfield Auto Loan Rates
Choosing the Right Direction: Toward a Lease or a Buy Agreement
Buying a car is a big decision. Buying a
new car is an even bigger one, not only because of the cost but also because you must decide if you truly want to buy or do you want to lease? For some people, leasing isn’t even in their vocabulary. For others, it’s a viable option. There are pros and cons to leasing. Let’s look at a few and decide if it’s right for you. More Costs, but Look at What I Get!
Generally, leasing is more expensive than buying, but some believe the extra money is worth the price. So what are you getting for the extra? First of all, you get a new, up to date, technically advanced vehicle for a monthly payment that is lower than a traditional car payment, especially for luxury cars. . If you think it’s important to keep up with the Joneses, then leasing is the way to go. You get the new car smell and never have to worry about breaking down on the interstate and waiting two hours for a tow truck. If you have a family, this in itself may be worth the price. If you see your car as more than just a means of traveling from point A to point B, and truly enjoy the car driving experience, then sign on the dotted line. If you need a business car and will be reimbursed for the expenses, then definitely consider a lease. Lastly, if you ever considered an alternative vehicle, now may be the time to lease. The federal government is offering up to
$7,500 tax credit for electric cars. On top of that, some states are offering up to an additional $5,000. Per Edmunds.com, 25% of new cars are leased, so there are quite a few people who think leasing is a good value for the money.
Can I Really Make a Profit on a Lease?
Leasing dealers predict what the car is worth at the end of the lease, which is called “residual value.” When it’s time to return the car, you can choose to buy it for this set price. If used car values rise, the residual value may be lower than the true value of the car. You can choose to buy the car and then sell it for a profit, or use the equity as a down payment to purchase another new or lease vehicle. Some people swear that they have experienced this scenario, but be aware that most leasing dealers are very adept at predicting future values. When you are near the end of your lease, go to Edmunds.com for the
true market value of your car and compare it to the stated residual value. If the residual value is higher than the true value of the car, you can turn it in, and walk away. Leasing is Essentially Renting
Once you turn it in and walk away, you own nothing and have to start the cycle again. So you have perpetual car payments. They may be lower than a traditional car payment, but they are still never ending. Leasing is renting a car where you essentially pay the depreciation for the manufacturer. Your lease payment is calculated by taking the current value of the car minus the residual value plus some fees. When you sign the agreement, you are locked in for the term of the lease and subject to prohibitive cancellation penalties.
Be Aware of These Fees
If you want to install a special sound system or make engine or exhaust modifications, you will be limited. Read your agreement carefully and take into consideration the cost of removing these systems before returning the car. Also, if you choose not to buy your leased vehicle at the end of the term, be prepared to pay a
disposition fee. Think about how many miles you drive a year. Most leases limit the number of miles anywhere from 10,000 to 15,000 per year. You can be charged an excess mileage fee of $0.10 to $0.25 per mile over the limit. If you know you drive more than the stated limit you will be given the option to buy more miles upfront for a reduced rate. The dealer will thoroughly inspect the car upon return. If you tend to get nicks and bumps on your car or have little messy family members who accidentally stain your upholstery, be prepared to pay an excess wear and tear fee. It would be less expensive to repair the problems before returning the vehicle to the dealer who expects it to be in excellent condition.
You will pay tax on the value of the car while you are leasing it. You will also pay something called an
acquisition fee which is an administration fee that falls in the range of $395 to $1,098. The more expensive the car, the more expensive the fee. That holds true for insurance too. You will have to make sure your car insurance is updated to meet the lease requirements. This may increase the cost of your policy. You will also have title, registration and doc fees.
Homeowners May Want to Refinance While Rates Are Low
US 10-year Treasury rates have recently fallen to all-time record lows due to the spread of coronavirus driving a risk off sentiment, with other financial rates falling in tandem. Homeowners who buy or refinance at today's low rates may benefit from recent rate volatility.
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