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Do Your Math!!!Aug 11 '00 (Updated Feb 26 '01) Write an essay on this topic.
Popular Products in Cars
The Bottom Line Do some research and keep a grip on reality.
I don't know how many times I have been reading the classifieds in my local newspaper and the car dealerships have advertisements for the many new cars that are on the market today. Many of these ads are for lease deals. As I read through the fine print at the bottom (you know, that stuff you can't read without a magnifying glass), I notice how car dealers are still trying to rip you off. I know that every dealer will tell you how great of a deal you are getting, but I urge you to see for yourself before you sign any papers. Every time you go and look at a car, whether or not you are looking to buy, take a calculator with you if you can't figure the math in your head. You don't have to have a doctorate to figure it, you just have to know how to get close. For instance, I saw an ad the other day for a new car in which the price was around $21,000. It was for a 47 month lease and it was around $250 per month with a $12,500 payoff. As I did the math in my head, I thought, 'That's not a bad deal.' I mean, you will end up paying around $12,000 through the lease and then paying another $12,500. That comes to $24,500 in all. When you finance a car to buy, you end up paying this much interest or more, so it wasn't too bad...UNTIL I noticed some more fine print at the bottom of the page. In this fine print, it stated that you had to have $3500 down in cash or trade-in. This is ridiculous! This means you will end up paying $28,000 for a $21,000 vehicle and the dealership will make an extra $2000 or so off of your trade-in, if that's the option you decided to take. I realize they are in business, but I didn't realize they were in the business of ripping people off. Ok, I really did realize that, but I hate to admit it. Anyway, there are a couple of other things that you need to think about when financing a car: 1. How much car can you afford? For me, that is not much (maybe I should ask, "How much car do you want to afford instead? I could probably afford more than I am willing to spend). I have actually never owned a new car. I have a 1991 Mustang GT that was a program car and a 1998 Maxima that was a lease and turned back in after three years. Even though I have never owned a new car, I have had no problems (knock on wood) with either of mine. If you can't afford to pay $500 per month, but don't want to be upside down with a new car, think about looking into 'used' cars...it can pay off! 2. Do you want a new car every three years? If the answer to this is yes, you might want to look into a lease. Many dealerships will allow you to lease a car for three years and then turn it back in with no money to return it (unless you are over the mileage which is negotiable at signing). If the answer is no, I wouldn't recommend a lease. You will pay on it for 3 years and still owe almost as much as when you started. So, in a nutshell, do your math and decide for yourself if you are getting a fair deal. The salesmen know many tricks to drive up the price or get more out of you, but you must stand your ground. Take a calculator with you and show them that you mean business and you are the boss in that showroom. Also, you have to have a grip on reality to determine what you can afford and make a smart decision. If you keep a grip on reality and do a little research before you go to the dealership, you won't get taken by the salesman and dealership.  |
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