150 00 Car Payments example essay topic

When it comes the time to find a car to drive or a place to live, how do you decide whether to lease or to finance? Chances are most people tend to investigate what the monthly payments would be and choose whichever is cheaper. But do you ever stop to think of all the things that should be a part of your decision? Did you know there are websites out there to help you determine how much you can afford? What your monthly payment would be? There is a lot of information available to you to help make this process an easier one for you.

Since finding the right car is something most people do before they find that perfect place to live, lets start with determining the difference in leasing and buying a car. Since the 1990's leasing of cars has skyrocketed which nowadays most people tend to lease their car because leasing offers an attractive and affordable means of driving a new car every few years. In the past few years, car dealership have been running amazing deals such as! SS no down payment!" or! Slow, attractive payments!" these advertisements tend to make leasing even more appealing than financing.

And because of these incentives you can often buy a more expensive, more luxurious car for the same payment of financing a lower priced car. Leasing in a nutshell. When leasing you are paying for the use of the car rather than paying for the car itself. In other words, your lease payment covers the depreciation of the cars over the length of the lease. Usually you can lease a car with zero down but the more you put down the lower your monthly payments will be. You as the lessee, are responsible for maintaining the car during the term of your lease and at the end of your lease you have the option to turn it in and walk away from it or choose to purchase it for the residual value of the car.

Seems simple enough but there are many other things to consider before leasing a car. Leasing is not for everyone, but for those who are willing to except the challenge to stay with in the restrictions you are given on the car and like to have a new car every 3 years or so, leasing may be for you. There are five main questions that everyone needs to ask themselves before leasing a car:" P Do you become easily bored with a car after only a couple of years of using it? Do you feel the need to have a new car every two to three years?" P Is driving a new car more important to you than actually owning one? Are you comfortable with the car payments, year in and year out?" P Do you maintain your car regularly, keeping it in good conditions at all times? Are you comfortable keeping your car the way it was when you bought it?

"P Do you drive a legitimate business use for you! |re your car? Do you plan on claiming you lease pay as a business expenses?" P Do you drive a consistent number of miles each year? Are you comfortable selecting and following the mileage limit? If you answered yes to more than three of these questions then leasing may be for you.

But remember with all the positive aspect of leasing come negative ones too. The most important negative to leasing is that at the end of your lease term you must decide whether to turn in the car and walk away or buy the car and take it back home with you. Many people struggle with this decision because neither decision is easy. If you turn it in, you have to get it inspected for any damages or wear and tear on the car over the term of your lease.

All thought they do allow a certain degree of normal wear and tear, any excessive wear and tear you have to pay for. Then come miles, when leasing a car you should almost always pay upfront for more miles because chances are you will go over your allotted mileage and then you pay a hefty fee. I believe most car company charge about. 15 cents a mile which adds up very quickly.

You also have to find that new perfect car to replace the old lease. These things can end-up costing you quite a bit of money up front and all at once. If you decide to buy it, you may be stuck with the car till it dies because with most cars the residual value is more than what Kelley Blue Book will give you. You also now have a car that does not have a warranty or you have to pay to put another warranty on the car. Once again there is the issue of miles, when you buy it, it does not matter how many miles you put on it but you now have a car with lots of miles verse a new car with no miles. And then there is the subject of selling your lease that you decided to purchase.

Chances are you will never, ever get what you paid for the car unless you kept it in perfect condition with low miles. Now financing a car in a nutshell. Not many people know that you can finance a new car same as you would a used car. I think because of this financing a car has a stigmatism because mostly likely when you are looking to finance a car you are not looking for a used one unless that is all that is in your budget.

When you finance a car, you are paying to own it. This option does not appeal to may people because it is a more expensive and you are stuck with the car till you decide to sell it. Remember the questions I asked you on the previous page. Well, if you answered no to three or more of the questions then financing a car might be just what you are looking for. Some of the things that people enjoy about financing a car is that since your monthly payments are applied towards the actual purchase of the car and since a typical financing period is 48-72 months. After that you own the car out-right with no more payments due and you! |re free to do as you wish with it.

You can opt to keep the car for as long or as short of a time period as you want. Since you are financing the car you have no obligation to maintain the car (although you should keep it maintained for performance and future sale purposes it is completely up to you). There are no predetermined mileage limits which allows you to take those road trips, live a good distance away from your work, and just enjoying driving wherever your car will take you. There are also no limits to modifications you can add to a financed car. If you want to add an air-intake or take off those tacky emblems that come are your car, you will not be penalized for that.

Most importantly, its your car to enjoy, to modify, and to choose to do with it as you please. But remember you need to make wise decision so when you want to sell it down the road you can get optimal dollars. Again, Kelley Blue Book is the best place to go when trying to determine the fair market value of your car. I know all those things sound great but there are some drawbacks you need to be aware of too.

When going to finance a car, a down payment is required unlike a lease where it is optional to the lessee. This poses a problem for some people because not always do they have $1000, $1500 or more to put towards a down payment. Since financing is paying for the whole car not just the deprecation, your payment are higher monthly than they would be in a lease. Since finance periods usually exceed the time frame of a typical manufacturer warranty period, maintenance during a four or five year financing period will be higher than with a two or three year lease. Both options have there positive factors and the negative factors.

Now, it is up to you to decided which option appeals more to you than the other. Go back to the five questions asked previously and really think about them and answer them seriously. You want to know you are getting the best deal for you and your everyday needs. Here are a few more questions that you should answer before leasing or financing a car to make sure it is truly the right choice for you: Which option is best for you?

Financing Leasing 1) How many miles per year do you drive? 15,000 or more Less than 15,0002) Will you be modifying the cars such as Speakers, alarm, different color of paint? YES NO 3) Would you like to extend your payments Over a long period of time, like 5-6 years? YES NO 4) Do you want a cash or resale value in your Investment? YES NO I have now given you many facts and questions to base you decision on. A car is not just a car, it can be an investment too.

Have fun, be smart and enjoy your ride!! Now that you know the difference between leasing and financing a car and are driving around town in your fancy car, I think it is time you learn the difference between leasing and owning a home. This is quite a bit different due to the fact that you do not buy as many houses as you do cars. This decision is very important and is something that can financially drain you if you do not make the right decision.

The question to buy or to rent is a very important. We are familiar with the American dream to own a home with a white picket fence. But is home ownership right for you? Or would renting be more in your best interest? You may have thought of these questions along with many others a decided that home ownership is what best for you as may renting.

Read what is to follow and maybe your answer will be reaffirmed or changed. We will start with renting a home or an apartment. Almost everyone one has rented at one point or another in their life whether it was in college, their first home, or even in the mist of going from one home to another. It is an affordable means of living, where you have no yard maintenance if you are in an apartment and if there is something wrong with an appliance or such you just call on your landlord to fix it.

You also might have some amenities that some homeowners do not have such as exercise room, pool with Jacuzzi. If your really lucky some of your utilities might even be paid by your landlords. These are just some of the advantages of writing that check at the beginning of the month. Another huge advantage is that you have the option to choose or negotiate the length of your lease.

Most leases vary from month to month (which is very expensive usually market price plus $150.00 a month) to 15 month leases. The longer your lease the better deal on your rent you will receive. Renting is a great way to try out neighbors to see if you like them before buying a home. A lot of place will give you a trial period where rent my be higher but the minute you decided to take on a longer lease your rates will drop.

This way if you don! |t end up liking the neighborhood you can pick up and move to another neighborhood (although moving is horrible). Rents range from $475 for a studio to $1200 for a three bedroom here in Denver. It all varies on the different neighborhoods, the amount of space you are looking for and the length of your stay. Of course, as in everything there is a down side to renting and then biggest one is you are putting money into someone else pocket and not benefiting from it at all. There is no equity being built while you are renting. It seems as though you are paying for a service rather than investing in an asset.

If you need something fixed, calling on your landlord might sound like a good and easy thing but the may not respond in such a way that is not as satisfactorily as you would have liked. And for all major changes in the apartment you must contact your landlord. If the landlord is slow getting around to fixing a leaky sink or a running toilet, this can and will make renting miserable. Renting does not give you the privacy that many people dream of having in their own home.

You can hear everything the neighbors loud barking dog, the people above or next to you moving around in their space. You may be quiet or want some quiet time but your neighbor might want to have a party or listen to his / her music at a loud volume. Lastly, you have no control over the rent. Your rent my go up a little or up a lot. And if you will not be able to afford the new rent, you have to give your notice and start looking for a place that you will be able to afford to live in. Finding a different apartment can be a challenging event.

You have to save money for the deposits they make you pay while continuing to pay for your current outrageous rent. If you want more control over your home living space than home ownership may be just the key for you. Buying a home gives the owner so much more pride because they have control over where they live, satisfaction of owning and freedom from paying rent. In a recent study done by the National Association of Realtors 76% of homeowners and 66% of renters considered pride of ownership an important reason for buying. Some advantage of owning a home are when you pay your mortgage, you are gaining equity not just throwing your money away.

The money you put in to it adds value to your house. If you buy a house for $250,000 and make a few cosmetic changes, or just fix it up a bit by putting in new doors., you are adding more money to the house, which means you can sell it for more if and when you decided to sell. The tax write-offs are great. What is deductible? The interest on your mortgage whether you pay it to a lender or to a home seller or other party. The interest on a second or home equity loan is also deductible up to $100,000.

Property taxes are 100% deductible but special government fees such as water or sewer assessment may not be. Loan points are also fully deductible for a purchase mortgage, in the year you pay them but when you refinance, you write off the points in increments over them term of the loan. These all help at the end of the year when you go to take care of your taxes. Owning a home allows you to settle down. If you are thinking about having a family and want some stability in your child's lives, then buying a home would be a good thing. You can purchase a home in a neighborhood that you can afford and work steadily on paying off the 15 or 30 year mortgage.

It also allows you to get to know your neighbors and the community better after putting down roots there. If you are looking for stability and a constant mortgage payment that does not fluctuate, home ownership might just be for you. You guessed it time for the downside to home ownership. Tax write-offs may be a plus, you won! |t realize the benefit right away. Property taxes can change and this could come to a surprise to you if you are used to the standard deduction on your home taxes. Your homes assessed value is what is used to calculate your property taxes.

There all kinds of reasons why your assessed value might change, whether it's because you made improvements or your neighborhood has suddenly gotten trendy. While every state has its own laws regarding property taxes, the township or counties in charge of levying the tax have quite a bit of say in how often property is assessed and with what methodology. What if you like the current neighborhood you are renting in but the prices of house are way out of your budget. If you are currently renting in Cherry Creek but you are only looking to spend about $250,000 on a house, you might have to travel south a little to Parker or Castle Rock to get a home for that price. Even though it may not be where all the action it, it might just be in your price range.

Another thing to think about is the commitment to the house you buy to realize the profit of owning it. If you know that you are working your way up the corporate ladder and will have to move as a part of getting to where you want to be within your company, it might be better to save your money for that move and not buy a house right now. If you are buying a house, you will need to be in the house at least five year to recoup some of the cost of buying it. Don! |t be afraid to answer these questions truthfully, if not you will own be putting yourself and your family in a bad place. If after reading this article you decide that your lifestyle fit's the requirements of a long-term commitment and you can afford to take on a house payment, then you are most likely ready to continue down the road to home. Now that you have most of the facts need to pick out a car and a place to live.

I think you are ready to have a case study and see how this is all applied and where the numbers and formulas come into play in making the correct decision for your lifestyle. Lets look at Mary, whose life has been turned upside down recently and is having to make a lot of important and big decision in a short period of time. Mary just got divorced, it was actually finalized on May 1, 2004. Her husband (Phil) gave her the house (which is in Highlands Ranch) because he was going to be moving in with in new girlfriend and did not need it plus he wanted to make sure Mary and their two kids (10 and 12) had a decent place to live. One problem Phil didn! |t think about was that the house payment was way more then Mary can afford.

She does work full time at the University of Denver as the dean of admissions but only makes about $55,000. Which is not enough to take on a $2500.00 a month payment and pay for a car ($400.00) and the other necessity of everyday life ($300.00 for credit cards and other monthly debt) Phil is going to pay her $1500.00 a month for the kids but she want that to go for their needs only and whatever is left over at the end of the month she will put into saving for them to use towards college. But Mary doesn! |t feel right about using the child support to make her house payment with. So, she is leaning towards selling the house. They just bought the house two years ago and if they sell it she believes she will make about $20,000 on the house. Her intent would be to use part of the money just makes selling the house as a down payment on a smaller, less expensive house and the put the rest away for a rainy day or in case trouble comes her way.

She is trying to decide what exactly would be the best option for her considering her situation. She is willing to move but would prefer to stay somewhere close so that the kids do not have to move from their friends and school. She is children are will be attending Crest hill Middle School and Highlands Ranch High School when they reach the right ages. So would like us to find her something in that area.

Would it be better for her to rent until she is making more money or would she be better of to buy a home that she can afford since a three bedroom apartment can get expensive? In the mist all this decision making Mary got into an accident which totaled her car. She will get about $4000 from her insurance to put towards a new car. As she is out looking at cars she is struggling with whether she should lease a new car or buy a used car. She is not sure financially which would be the best option for her and give her the most for her money. Mary does not care whether it is brand new or a few years old however she does not want it to be more than five years old.

She does need a car that is reliable seeing as how she has kids that are both active in sports and other various programs she is constantly drive from one side of town to the next dropping and picking up kids, so she wants a car with a good warranty. Ideally, Mary would like to spend no more than $400 a month. Mary would also love an SUV if possible because of the kids. We have looked at two SUV's that we think she will really like, they are both smaller but give her all the benefits of a full sized SUV and they will both fit her needs. One that is a 2004 brand new and another that is a 2000.

Both SUV's are known for being dependable, reliable cars. We are now going to analyze which options will be the best for her in her current position. We will do the calculations for both renting and buying a home along with leasing or financing an SUV. This is give her a better understanding of what she can afford with the information she has provided us with and what her monthly payment will end up being. From there we will give her our professional suggestions on what will give her the best results in the long run.

1) For Mary's means of living we are going to do a series of calculations that will determine the best option available for her. To start we are going to find out How much house can Mary qualify for? If she uses our loan company she can get a loan on her house at an all time low of 5.75%. If she chose to go somewhere else the numbers will vary. Advisement: This calculator should be used for estimation purposes only. Income: Annual gross income: $55,000 Monthly debt expenses: Minimum monthly credit card payments: $150.00 Car payments: $400.00 Child support: $0.00 Other fixed monthly debt expenses: $150.00 Payment breakdown: Property tax rate: 2%Monthly insurance and other costs: $100.00 Monthly association dues (if any): $65.00 Loan information: Down payment amount: $10,000.00 Loan term (months): 360 Interest rate: 5.75%REMEMBER: This calculator is for estimation purposes only.

Mary's gross monthly income is $4,583.33. Her total monthly expenses come to $700.00, leaving her with $3,883.33 each month. Based on these inputs, the highest payment she would qualify for would be 36% of her gross monthly income less fixed monthly debt payments, $950.00. With this payment, Mary would be able to finance $102,412.23. If you include your down payment of $10,000.00, she would be able buy a home worth $112,412.23. Mary's monthly payment would be broken down as follows: Principal and interest: $597.65 Property taxes: $187.35 Insurance and other costs: $100.00 Monthly association dues: $65.00 Total: $950.002) Next, we want to see How much House Mary can Afford?

Monthly payment information: (This is the highest monthly payment she can afford. The payment includes all taxes, fees, dues, insurance, etc.) Highest payment Mary can afford: $1000.00 Payment breakdown: (These items are included in the 'highest monthly payment' above.) Property tax rate: 2%Monthly insurance and other costs: $100.00 Monthly association dues (if any): $65.00 Loan information: Down payment amount: $10,000.00 Loan term: 360 Interest rate: 5.75%Remember: This calculator tells us how large her loan will be, but will not tell us whether Mary would qualify for the loan. Mary would be able to afford a house with a price of $119,076.35. Her monthly payment would be broken down as follows: Principal and interest: $636.54 Property taxes: $198.46 Insurance and other costs: $100.00 Monthly association dues: $65.00 Total: $1,000.00 3) Our last calculation we want to run is, Would Mary be better off Renting or Buying a home? This calculator will compare the cost of renting vs. the real cost of buying a home.

This calculator will compare the costs and benefits of taxes, fees, and interest Mary will pay when buying a home to the monthly rent she will pay when renting. It does not include payments made against the principal on her loan, since those payments become equity in of her home. Monthly rent: $1000.00 Home cost: $110,000.00 Down payment: $10,000.00 Loan term: 360 months Points: 5.75%Fees: $1000.00 Mortgage insurance: $0.00 Homeowner's insurance: $0.00 Association dues: $65.00 Average monthly maintenance: $100.00 Property tax: 2.0%State and Federal income tax: 28.00%Interest rate: 5.75%Your savings rate: 0.00%How much will your home appreciate each year? : 5.00%How much will rent increase each year? : 5.00%How long will you stay in this property? : 60 months Rent Buy Monthly expenses Monthly payment 1,000.00 583.57 Property tax 183.33 Association dues 65.00 Mortgage insurance 0.00 Homeowner's insurance 0.00 Other costs 100.00 Total Monthly payment 1,000.00 931.90 Present value of all costs over 60 months?

59,914.91 56,457.81 Home equity? Here is another chart that you will you to better understand what you end up up paying for rent over 20 years and various monthly payments. But if she chose to go else where than once again the number will vary: 4) How much car can Mary afford? To calculate the most expensive car she can buy, enter the information below Highest monthly payment she can afford: $400.00 Down payment: $4,000.00 Trade in (if any): $0.00 Loan term (months): 60 Interest rate: 2.50%Based on this information, the most expensive car Mary can buy is $26,538.56. NOTE: This calculator computes the loan amount (which includes taxes and documentation fees), but does not indicate whether she would qualify for the loan. This amount is computed as follows: Cash down payment: $4,000.00 Trade in: $0.00 Loan amount: $22,538.56 Total: $26,538.56 Mary will end up paying $1,461.45 in interest over the course of the loan.

5) How much would Mary have to pay monthly to buy a $26,500 car? Loan amount: $26,500.00 Payment amount: $400.00 Number of months: 60 Interest rate: 2.5%Financial Details: Principal amount: $26,500.00 Payment amount: $470.31 Interest rate: 2.500%Interest compounding: Monthly Total payments: $28,218.29 Total interest: $1,718.29 6) Know that we know how much car Mary can afford. We want to figure out what an estimate residual value would be on a $26,500 car. #Lease start date: 05.15. 04 Lease amount: $26,500 Number of advance payments: 1 Number of payments: 48 Payment amount: $400.00 Interest rate: 2.50%Residual amount: $9,071.20#Lease start date: 05.15. 04 Number of advance payments: 1 Number of payments: 48 Payment amount: $400.00 Interest rate: 2.5%Residual amount: $9,071.20.

Lease amount: $26,500.00 With all the calculations we have just done for Mary. It is now time for us to analyze the data and give her a professional opinion on what is in her best interest. To star with the options between buy or renting a home. We most definitely opt for Mary to buy a house. It may seem like a lot up front but as you can see from the figure on question 3, she will save $42,639.59 in a five year time span. This will also give her time to build equity and maybe in five years she will be able to sell and buy a big house.

Hopefully she will also be doing more financially as she had express an interest in earning more per year. This will also benefit her because it give her the freedom of throwing money away. Although she may be able to live in Highlands Ranch for that price, if she want to travel a little further south into Castle Rock or east into Parker. She may be able to find one that is in her price range.

Most likely it will take at least 90 days to sell her home so, in the mean time we have a list of things we suggest to home buyers who have the time to save a little more to put down on a down payment so that they! |re monthly payments are a little cheaper. Here is a list of four tips we feel help people get off to the right foot when buying a home. 1) Transfer high balance credit card to a credit card that offers a lower APR on balance transfer or maybe even 0% interest for a year to help you actually pay down the card not just pay the interest. 2) Start putting money into a saving account for your new home.

Whether you can put $50 a month or $200 a month. It will come in handy when you need something for the new house or are just a tad shy with the down payment. Make a game of it with your kids and create a chart and set a goal even if it is only $1000.00 and let then color the chart for every $50 you save. It will make them feel like they are a part of it and let you know where you are heading towards your goal.

3) Make change in your spending habits. Maybe only go see a movie once a month verse once a week. Same with lunches everyday at work, dinners and other sources of entertainment. Budget yourself and all your expenses for the month and then save half of the rest and what is left is yours to spend and enjoy. It may not be much but your new house will be worth it. 4) You can always raise money too.

I know that may sound cheesy and I am not suggesting going door to door selling chocolate for some ridiculous price. There are other options such as ask for help from your church, synagogue or other non-profit organizations that you may belong to. Get a second job for a few month to help save for the extra money. Maybe work somewhere you enjoy going or a hobby.

Like the garden center at Home Depot or Lowe's. Or the farmers market in town. There are many jobs that you can do that are fun and exciting and honestly will not feel like work. Ever thought about cleaning the house a have a oh-so-famous spring or summer garage sale.

You can make lots of money hosting a garage sale because your junk is another mans treasures. Please people are always looking for bargains on items they need but don! |t want to spend a fortune on. And remember the rule of thumb if you have not worn it or used it in six month to a year it needs to go, chances are you won! |t use or wear it again. If Mary decides to follow your advice to buy a home and follows three or four of these helpful tips.

And uses our lender for her loan. She will have an easy and successful time buying a new house and making it a home. This diagram give a the eye a great visual of a home buying roadmap: As for Mary's car, our advice is the exact opposite than what it was for the house. We, hands-down, feel that leasing would benefit Mary the most because of the qualities she wanted in her car. A lease will have an outstanding warranty and the payments will be a lot lower than if she were to buy the car. Plus, isn! |t it fun to own a new car every three to four years.

There are always new things out on the market plus her kids will be 14-16 when she trade her new car in and maybe she can then get something she will enjoy such as a sports car or a convertible since she won! |t have to drive the kids around especially if she and Phil are able to get her oldest kid a car to drive and drive around the younger son too. Looking at questions 4-7 you can see the different information complied about leasing a car. Mary will be able to lease a more expensive car for a lot less than buying it. She can drive a $26,500.00 car at $400.00 a month and it will probably be less than that since you can always talk the dealership down.

Of course, we also suggest not to go to a No-Haggle dealership. You will get ripped off and feel cheated when you know how much lower your payment could have been elsewhere. We do have a few tips we like to make people aware of with lease or remind them if they already know. 1) Always, always read the fine print. Make sure you know about all the hidden charges they like to spring up on people when signing their lease. Know about the security deposit, registration fees, excessive mileage cost (usually.

15 cents a mile but always good to ask and know for sure). Be sure to get the whole story on the specials you see in the newspaper or on TV, such as! SS Beautiful 2004 Toyota Highlander only $299.00 a month. Come and get one now. !" There is usually a hefty down payment and they are usually bottom of the line with manual everything. 2) Negotiate the price and terms of your lease.

They mark car way up and there is always room to drop the price. And usually they would be more than happy too. A lot of places also do deals if you are a previous owner of a Honda or such. Our best advice in term of the lease is to also pay the few extra dollars a month to get the extra miles. 15,000 miles is 100% better than only having 12,000 miles and going over.

Most companies will only charge you. 10 cents per mile to add it into the lease while if you go over an have to pay, you pay. 15 cents per mile. That is a difference of $150 a year which does add up to $600 over the term of your lease and that make a difference. If you add in the extra 3,000 miles it will cost you an extra $1200 of the term of your lease which will up your monthly payments maybe $15 otherwise you will end up paying $1800 for being over 12,000 miles for the term of your lease. 3) Keep up the maintenance on your lease so you are not hit with excessive wear and tear on the car at the end of your lease.

It is always best to do all maintenance and repairs at your dealership or where they recommend you to. And keep all your records of things done to the car from tinting windows to fixing your bumper from a fender-bender. 4) Never, ever buy your car at the end of your lease. Turn it in and walk away. Because if you decide to purchase it you will pay way more than you would have it you would have bought it out-right to begin with.

Hopefully Mary decides to follow our advice with buying her home and leasing her home. We feel these decision will be most beneficial to her and will give her the most for her money in the short and long term. Seeing the figures in the format we set-up for Mary really helps a person to understand where there money is going and what goes into consideration when buying or renting a home and buying or leasing a car. It puts the data into a form the anyone can understand not just number people. Good Luck to Mary and the best wishes for her future.