This Week in Your Wallet: Get The Deal on Car Leasing
In the never-ending “rent versus own” debate, we typically talk about houses or apartments: Is it better to be beholden to a landlord or the bank? Do you want to move every six months or settle down and establish roots? (There are no blanket answers, by the way — it all depends on where you are and where you’re going, financially and geographically.)
Now, according to a new article in the LA Times, the “rent versus own” question is extending to another realm: our cars. Edmunds.com reports that more drivers are choosing to lease their cars than ever before — in the first quarter of this year, 25.6 percent of new-vehicle sales were leases, up from 16.3 percent less than ten years ago. And there’s a reason for that. “I can’t believe some of the lease deals that I see,” the Times quoted Philip Reed consumer advice at Edmunds as saying. “They are really good.”
Part of the shift toward leasing has to do with lower monthly payments. In 2012, the median lease payment was $361 per month, compared to the median $434 per month paid by car owners. And there are many less expensive options, too — like $169 for a Honda Civic with no downpayment. Leasing also allows users to try out new cars every three years, versus getting “stuck” with the same model for ten years.
However, leasing has its downfalls as well. Among the things the LA Times article says you should consider:
Extra fees. The article notes that there are monthly tax and registration fees, which means that an advertised $249 monthly payment is actually closer to $275. If you have a lower credit score, you might also be looking at a higher monthly payment. Budget accordingly.
How much you really drive. Most lease contracts charge penalties if you drive more than 12,000 to 15,000 miles per year. If frequent business trips (or soccer practices for the kids) push the odometer to, say, 20,000 miles per year, leasing likely isn’t worth it.
The cost of being a serial leasee. Yes, the idea of leasing a new Mercedes every three years for less than the cost of buying the Mercedes outright is appealing, but crunch the numbers and think beyond the short term. One lease after another after another means you always have a car payment. Buying a car, paying it off, and continuing to drive it wipes that line item from your budget.
For more tips on leasing — plus a list of the best lease deals right now — check out the full LA Timesarticle, linked above. And now, here are the other headlines for the week:
Fatherly Financial Advice
To all the dads out there: I hope you had a great Father’s Day this past weekend! Fittingly, it seemed as if every news outlet I read had some sort of “best money tips from dad” feature, from investing advice in the Chicago Tribune (“vanilla is more popular than tutti-frutti,” was the sage advice from a godfather who knew a thing or two about the stock market) and Forbes (“Invest in knowledge, so you can keep growing into your future,” writer Kerry Hannon’s dad told her) to clever sayings curated by Moneymagazine. (My favorite of the bunch? “Keep your burn rate less than your earn rate.” That should be a bumper sticker! Or maybe a Money Rule?)
As I recently wrote for RetailMeNot, my dad taught me more than I could fit in a 700-word article, but among his top lessons were how to work hard to achieve a goal, how to talk to just about anyone, and most deliciously, how to make a milkshake. What are the best lessons you’ve learned from your dad?
Urgent Care Sticker Shock
If you’ve ever struggled to get an appointment with your doctor and had to resort to one of the urgent care facilities that are popping up around the country, you likely know that the visit, while cheaper than the ER, still comes with a hefty price tag. And as a recent Reuters article pointed out, that price tag will vary depending on where in the country the care center is located, and which services (x-ray, stitches, etc) you need from them. So how can you know exactly what price tag to expect? Your best bet is to callyour insurance company, or check the back of your insurance card. You could also try calling the urgent care facility, but as the Reuters piece notes, the receptionist won’t know what your treatment will be and might not be able to give you the best estimate.
America’s Worst Charities
I’ve written here before about how, when picking a charity to donate to, it’s important to make sure the charity helps who they say they’re helping and that your money will actually go where you want it to go.The disturbing results of a year-long investigation by CNN, the Tampa Bay Times and Center for Investigative Reporting offer further proof as to why researching a charity is so important. Among the findings from the investigation: the worst charities in the country give less than 4 percent of all donations as aid to the cause they purport to help. Furthermore, many of these bad charities have names that sound like good charities — the Kids Wish Network was found to be very bad, while the Make-A-Wish Foundation is still very good. The lesson from this investigation is not to stop donating, but to be vigilant and do your research. (CharityNavigator.org and GuideStar.org can help you with that research process.)
Have a great week!
Jean
