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Loan, Credit, Lien, Liability & debt
Car Loan,
Credit, Lien, Liability & debts & Leasing
Are Your Biggest Hidden Expense
The expensive offices of car manufacturers
are built from the profits on car Loan, Credit,
Lien, Liability & debts and leases, not
cars.
auto Loan, Credit, Lien, Liability &
debts,auto
leasing,savings,budgeting,personal finance
I get
a lot of questions from people about car financing. And
it makes me wish that more people were educated on how
owning new cars can be the biggest destroyer to their
personal net worth. I don’t mind automotive
manufacturers earning a lot of profit, and I know of one
that earns the majority of their money by financing and
leasing cars. It just doesn’t have to be your money, all
the time.
There is a spectrum of two extremes
that you can follow for car ownership. You can hold
brand new cars for only a couple years (buying or
leasing) or you can hold each vehicle for well over 5
years (and maybe buy them used in the first place). You
can already guess which one is financially healthier,
but it will help if you know why.
It is my
observation that owning a brand new car for less than 4
years is the biggest destroyer of anyone’s net worth. I
have a lesson plan for you if this is your preference of
car ownership. Each year, you should be forced to
withdraw the cash equivalent of the amount that your car
depreciated over the last year. Then you take that wad
of cash, and in front of your parents, spouse, kids, and
financial planner – you feed it all into an industrial
paper shredder that turns it to dust. It is just a
little helpful tip from me to illustrate what you are
doing to yourself.
When billionaire Warren
Buffett was young, he refused to replace his old
Volkswagen for many years even when he had the money to
buy a new one. Why? Because over his lifetime, he knew
that having $20,000 invested over decades would grow
into millions of dollars in net worth to him.
Car
owners also shouldn’t hold on to them forever, because
there is an inflection point where the longer you hold
onto a car, the better it would have been to replace it.
How can this be? It occurs when the annual repair costs
of the car outpace the drop in value of a newer car. Let
me explain: let’s say that you are driving your
25-year-old-junker and are paying $4,000 a year in
repairs to keep it loping along. Now, if instead you had
replaced it with a newer car (maybe still under
warranty), and it only dropped $3,000 in value – you’d
be $1,000 ahead, happier with a newer car, and relieved
at many fewer trips to the dealership over breakdowns.
It is too foolish for me to even begin addressing
the financial damage of leasing a car, or getting an
auto Loan, Credit, Lien, Liability & debt for more than three years and getting upside
down (when you owe more on the car than what it is
worth). Just avoid leasing and +4 year Loan,
Credit, Lien, Liability & debt payment
plans because these are the money-makers for the
companies on the other side of the transaction.
Taking all this information into account, it is my
opinion that the following is the financially optimum
car ownership model: buy a car that is about two years
old with less than 20,000 miles, and keep it for at
least 5 years until the repair costs start exceeding
$2,500 a year. As a general guide, this will help you
avoid the sharp depreciation in the first two years and
give you a car under warranty for a while, and then you
bail out when the expenses start getting out of control.
Car Loan,
Credit, Lien, Liability & debts –
Navigating The Maze
It’s too bad many people don’t know about
how to get the best auto Loan, Credit, Lien,
Liability & debts. Businesses make a lot of
money on what consumers don’t know. These days no one
has enough money that they can afford to get locked into
a bad Loan, Credit, Lien, Liability & debt. In this article I hope to be able to help
you pick the right Loan, Credit, Lien, Liability &
debt for you.
Just going to a
car lot and asking them to put together your Loan,
Credit, Lien, Liability & debt for
you is not the best way to do this. Let’s start with
that right away. Their job is to sell you a car and
whate...
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It’s too
bad many people don’t know about how to get the best
auto Loan, Credit, Lien, Liability & debts. Businesses make a lot of money on what
consumers don’t know. These days no one has enough money
that they can afford to get locked into a bad
Loan, Credit, Lien, Liability & debt. In
this article I hope to be able to help you pick the
right Loan, Credit, Lien, Liability & debt for you.
Just going to a car lot and
asking them to put together your Loan, Credit,
Lien, Liability & debt for you is not the
best way to do this. Let’s start with that right away.
Their job is to sell you a car and whatever Loan,
Credit, Lien, Liability & debt they
can get you that will achieve their purpose is the one
they will try to get you to take. They want you to drive
out with the car today.
You should negotiate your
car Loan, Credit, Lien, Liability & debt before you make the actual deal to buy the car.
Many people think these two things must occur
simultaneously. Wrong. There are a lot of things you
must decide before buying a car. One of those is how you
are going to finance it, but let’s explore all of things
you will need to decide first.
Are you sure you
know how much you can afford to pay for your new or used
car? When you arrive at that figure, remember, you
cannot spend all of what you can afford on the car
payment. What I mean is this; say you can pay only $400
per month for your new or used car. That is your budget.
How much of that goes to auto insurance? Subtract the
cost of insuring your car. How much do you have left?
Now think about the interest on your car Loan,
Credit, Lien, Liability & debt. How
much of that will you be paying. You can estimate that
based on the amount of car payment you are aiming at.
Now how much is left of the original $400 per month you
allotted for your new car?
If your budget for a
new or used car was $400 per month, you really can’t
agree to payments of more than about $250 per month. The
other charges and incidentals will bring you back up
near the $400 mark you started with.
Now, if you
are looking at new cars, is buying or leasing a better
option for you? You will need to read up on both options
before deciding what is right for you. Don’t let the car
salesman decide for you and pressure you into something
that isn’t what you need or want.
Loan,
Credit, Lien, Liability & debt
calculators can be a big help. There are many on the
internet, so be sure to find a reputable one. You can
experiment with several options, and using a calculator
will help you understand the whole process a little
better.
They will even help you figure out how
much you can afford to pay for a car. You may think you
can pay more than you really can. This little tool will
give you a reality check of sorts so that you do not get
into a deal that is over your head.
So many
people think they can afford more car than their budget
allows and let it get them into credit and debt trouble.
Doing your homework ahead of time and having a little
discipline to stay within your means will keep you from
having these problems.
You can use that tool over
and over again, until you are comfortable making the
decisions you will need to make when it comes time to
negotiate with someone for the purchase of your car.
Remember, when you are the buyer, you are in charge,
not the seller. If you have done your homework, you know
how much you can afford, what type of Loan,
Credit, Lien, Liability & debt you want,
what terms you need, and all of the other details. It’s
their job to sell you a car that fits within the
parameters you set.
The bottom line is do not buy
more car than you can afford. Do not accept a car
Loan, Credit, Lien, Liability & debt
that is going to put you in a financial bind. Don’t
agree to a car Loan, Credit, Lien, Liability &
debt just because the salesman tells you
it’s the only one he can get you. Do your homework
before you choose the car. Too many people choose the
car they want, then go out and try to find a way to
afford it. That’s putting the cart before the horse and
a sure way to get you into debt trouble.
I hope
this helps you open your eyes and prepare for a positive
car buying experience. Buying a new car should be fun,
just don’t let the fun turn into worry down the road. I
hope you find this article useful!
Car Loan,
Credit, Lien, Liability & debts – Take
Your Pick
You
may be one of those fortunate folk who know precisely
want they want when it comes to replacing your car. Or
maybe you’re the type who treks from garage to garage
trying to find perfection. After a while all these cars
merge into one and you can’t remember which extra was
standard with which car. Your wife and children threaten
to leave home and the cat and dog are less than
impressed too. Maybe at this stage you turn your only
friend, the computer, for inspiration and su...
Loan, Credit, Lien, Liability & debts,car,finance,options
You may be one of those
fortunate folk who know precisely want they want when it
comes to replacing your car. Or maybe you’re the type
who treks from garage to garage trying to find
perfection. After a while all these cars merge into one
and you can’t remember which extra was standard with
which car. Your wife and children threaten to leave home
and the cat and dog are less than impressed too. Maybe
at this stage you turn your only friend, the computer,
for inspiration and surf the net for bargains. They’re
certainly there to be had, and as with most things
nowadays, it’s an easy way to go, with lots of help and
advice available at the click of a mouse.
If the
latter category is the one that describes you best you
have our deepest sympathy.
When it comes to
financing your choice of car, be it new or second hand,
the means to finance it can be just as bewildering, but
making the right choice can save you a great deal of
money.
Interest free finance is worth
considering. This is normally offered through dealers
and tends to be restricted to new car buyers. If the car
of your choice is covered by one of these deals then
this will probably make your decision a lot easier.
Often these deals ask for a fairly substantial deposit.
Not all models are offered at nil or preferential rates
and the one you want may in fact be at a higher interest
rate than normal. It’s all a matter of swings and
roundabouts. If you’re a “haggler” then it’s unlikely
you’ll get both a discount and a good finance deal. The
better option may be to get the very best discount you
can on the car and then arrange your own hire purchase
or personal Loan, Credit, Lien, Liability & debt.
Dealers will be happier if you
opt for hire purchase. It’s easy to arrange and offered
on both new and used vehicles. As far as the dealer is
concerned, they will earn a very nice commission from
the finance company. Sometimes you’ll be able to get an
improved deal when they take this commission into
account, which is why the question of how you’ll be
paying for the car crops up when you’re seated in the
chair, offered a coffee and the serious talking starts.
Ownership of the car is not yours until the final
payment, so you’ll need a settlement figure if you
decide to part exchange it for your next car.
You
may decide to take a personal Loan, Credit, Lien,
Liability & debt. This effectively
makes you a cash purchaser. Remember that the dealer
will prefer you to take the hire purchase route and make
sure you do your sums, it’s the final sum paid that
matters at the end of the day.
Personal Contract
Purchase is a fast growing area of car finance. An
agreed deposit is made; usually equal to about three
months repayments. You then pay on a monthly basis for
an agreed period, often two or three years. At the end
of this period you have a choice of returning the car or
making a final payment and keeping it. You will be aware
at the beginning of the agreement just what this figure
will be and this is guaranteed provided you haven’t
exceeded the annual mileage allowance. Again this is per
the agreement but usually estimated at around 12,000
miles per year.
Obviously with this arrangement
the monthly payment will be lower than it would be with
hire purchase, but the car is only yours after the final
lump sum is paid. Many people stick with the same make
of car and use this type of finance, returning the car
and replacing it with their choice of a new model at the
end of the term.
A simple lease deal may suit you
even better. This is arranged through a leasing company.
You negotiate the price for the car from whichever
source you choose, and then agree the period of the
lease, normally two to three years. Make a payment equal
to three months of the agreed monthly repayment, set up
your monthly payment source and at the end of the time
you simply return the car and that’s it. No hassle, no
used car to sell. Choose, lease, pay and hand back.
So, the choice is yours. Careful comparison will pay
dividends, make those comparisons and make your money
work for you.
Enjoy your choice!