Applied Earning Rate to Lease Vs. Finance Savings
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“If the item you are buying appreciates in value, buy it and own as much of it as you can. If the Item depreciates, lease it, because the use value is the same and your money is more valuable elsewhere” – J. Paul Getty – circa 1929
‘Elsewhere’ is meant to say anywhere in your financial life that either earns or saves money for you. It could be an appreciating asset like your home or land, stocks and bonds, but also could be simply applied to a charge-card balance or spent on other goods and services. To exemplify, we apply an earning rate of 10% APR, easily obtainable for secure investments like long-term CDs, to the savings of each of the categories.
Applying interest to the initial finance savings makes it worth $486.58 by the end of the driving term. The monthly savings earned by leasing, applied in a series of equal deposits, totals $11,069.63 by the end of the driving term.
During the ‘driving term’, $10,583.05 is saved overall by leasing and the value received is even! If you lease, you can buy it, sell it, trade it in, or walk away. With a lease you also have more flexibility to trade earlier and avoid maintenance and repairs.
If you want to own your vehicle, $2,032.62 is saved by leasing and purchasing at lease end. A fixed purchase option is included in every true lease. If you take pride in ownership, this is by far the best, safest, and least costly way to get there!
Other Benefits Enjoyed by True Lease Drivers:
Prestige – The financially wise lease their automobiles.
Better income tax write-offs for business use drivers – Request a free personal analysis.
Flexibility to trade – Inquire about early termination options and procedures available only with a true lease.
Lower or eliminated maintenance costs – Trade vehicles before they occur.
GAP protection – Pays any deficit occurring from the difference between balance owed and amount paid by your physical damage insurer in the event of a total loss.
Fixed purchase option – Allows for equity recovery at early or end-of-term lease termination and/or ownership.
Guaranteed future value – Protects you from abnormal depreciation due to market conditions, excessive recalls, etcetera.
Safety from legal aggression – The vehicle is titled to the lessor so you are protected from law suits filed against the owner of a vehicle involved.
Sep 26, 11:43 AM in
We locate, inspect, and buy cars and trucks at wholesale dealer auto auctions nationwide. Of course, one reason is vehicles at auctions cost $1000’s less than vehicles at retail dealerships. Another reason is that we can inspect those vehicles on the auction premises and obtain written guarantees of their condition.
1. When a vehicle is first consigned to an auction, the seller makes legal statements about its condition. The federal government has laws about vehicle disclosure at auction. The auction itself subjects every transaction to arbitrations policies before paying the seller for the vehicle. So, if a seller misrepresents a vehicle at registration, he is wasting his time and an amount of money is lost to him for sale fees, buyer fees, etcetera.
2. When a client shows interest in an auction pre-sale inventory listing, we send our licensed wholesale buyer to make a second physical inspection of the vehicle. He carries a paint meter, evaluates the interior, mechanical components, drives the auto, and uses every component on the...
Sep 26, 11:40 AM in
All true leases contain an assumption clause whereby another qualified party can take over all of your remaining obligations under contract. This legal tool can be used to dispose of a lease at any month during the original term. There is a $300.00 fee that is usually paid for by the new driver. Our office sets up and processes the transaction for you.
This is a legal assumption clause, not a ‘straw-purchase’ or a sub-lease. All parties know and approve of the transaction. You will be removed from all obligation and the new driver will assume full obligation for the remainder of the contract.
How this is possible when it cannot be done with a financed vehicle: It is illegal to drive, own, make payments on, get insurance on, or have a side contract on a vehicle financed in another persons name. For financing, the title has to be changed and all liens satisfied. A new loan has to be written and more interest and taxes are incurred.
Unlike finance contracts,...
Sep 26, 11:39 AM in
Since a true lease pays the interest charges and depreciation charge in equal amounts each month, a level-yield payoff is established.
A monthly lease payment is comprised of three parts:
True-Lease:
Depreciation
Interest
Use Tax
Total
$191.48
$ 84.91
$ 19.35
$295.74
Example Payoff Amounts:
12 mo. Payoff: $17,741.29
19 mo. Payoff: $16,400.95
27 mo. Payoff: $14,869.14
36 mo. Payoff: $13,145.86
We can predict the payoff for any month going forward and remaining interest charges and tax payments are removed*. The principal balance of the lease above is depreciated by $191.48 each month. That should align with the depreciation suffered by the vehicle each month.
Of course, it is impossible to predict the actual value of the vehicle in the future at any given month, but the true lease offers the safest and most economical plan for early termination. If you terminate early, not using an assumption, only three things can happen; 1) the payoff is equal to the vehicle value and we...
Sep 26, 11:37 AM in
The mileage clauses are fair, unlike diabolical leases you may have heard about. The charge per mile if you go over your contracted miles is only 15 cents. That amount is only charged if you go full term, turn the vehicle in and have a mileage deficit… which you would not do of course.
Our plan is to include the miles that you need in your lease contract and make use of safety factors built into the true lease contract. Here are some examples of how miles effect monthly payment on a given vehicle.
Annual Mi:
12000
15000
17000
20000
24000
30000
Payment:
$328.69
$348.24
$366.10
$392.89
$428.62
$482.20
Calculate your miles by the day, week, and year.
_________ + Workday miles X workdays per week
_________ + Off Day miles X off days per week
_________ = Total X work weeks per year:
_________ + Vacation miles & other planned trips
_________ + Safety factor miles per year
_________ = Annual miles
...
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