Monthly Archives: July 2016

Lease a Used Car

Most car deals made at new car dealerships can be neatly lumped into one of three categories: new car purchases, used car purchases and new car leases. However, there is an often overlooked fourth category: used car leases.

Used car leases are a bit of a secret in the franchised car dealership world. Not all dealerships offer them, and it’s unlikely you’ll see them advertised on television, on a dealership website or in the Sunday paper.

You can get a used car lease, although it takes legwork. If you put in the time to find a franchised car dealer that can execute a used car lease, you’ll likely be rewarded with a significantly lower monthly payment than that of a new car lease.

How Does Used Car Leasing Work?
Used cars available for lease from franchised car dealerships will, as a rule, be certified pre-owned (CPO) vehicles less than four years old, with fewer than 48,000 miles on the odometer.

Used car leases follow the same basic structure as new car leases. The lender writing the lease will determine the vehicle’s residual value, and the lease payments will be determined by the difference between the vehicle’s sale price and its residual value. In most cases, the lender will be an automaker’s “captive” financing company. Think Toyota Financial at a Toyota dealership.

The lender writing the lease will assign a money factor (interest rate) to the deal, just as in a new car lease. And just as interest rates tend to be higher on used car loans, a used car’s money factor will likely be higher than the money factor for a new car lease. Even so, the higher money factor is coupled with the used car’s lower sale price and lower rate of depreciation, usually resulting in a lower overall payment. Shoppers who lease used cars are able to buy out the vehicle at the end of lease, just as they can with new leased cars.

During my 12 years selling and leasing cars, I saw buyers shave anywhere from $40-$125 per month from their monthly payments by opting to lease used instead of new.

A note of caution: This story only deals with used car leases done by franchised dealerships, which are the only ones that can offer true CPO cars. You may hear about used car leases from independent “Buy Here, Pay Here” dealerships. Such leases frequently come with a lot of strings attached and you should scrutinize the terms very carefully.

How To Do a Used Car Lease, Step by Step
Pick a brand that does used car leases: According to Edmunds data, these automakers’ captives financed used car lease deals in 2015: Acura, Audi, BMW, Chrysler (which includes financing for vehicles from Dodge, Fiat, Jeep, Ram and SRT), Ferrari, Honda, Hyundai, Infiniti, Kia, Lexus, Lincoln, Mazda, Mercedes-Benz,Mini, Mitsubishi, Nissan, Porsche, Toyota, Volkswagen and Volvo.

The exceptions are Ford Credit and  GM Financial, which finances vehicles from Buick, Chevrolet, Cadillac and GMC, according to spokespeople from those captive finance companies.

Have a point of comparison: To effectively judge if a used car lease is a good enough value to bypass a new car lease, you have to have something to compare it to. If you don’t already have a lease quote for a new version of the car you want, get one. With that benchmark in hand, you can start shopping.

Find the car: Edmunds.com has plenty of tools to help you find the right used car. Search for the model you’re most interested in and remember to home in on CPO vehicles. Because you are shopping in the used market, you may not readily find your preferred color combination or mix of features. Be flexible. Select a few cars from different dealers. That way, if the first dealership you talk to isn’t able to help with a used car lease, you’ll have other choices.

Find a dealer who’ll do the deal: Since used car leasing is not the norm in the car business, finding a dealership that can help you will likely take some time and patience. You may have to call a few dealerships to find one that is set up to lease used cars.

How to find the best on car loans for you

unduhan-25Zero percent loans-are-often advertised as one of the best deals you can get when you’re buying a new car. You’ll sometimes hear people call such financing “free money.” It’s not that exactly, but it’s as close as you’re likely to get.

Zero-percent loans tend to grab attention, but they make up only about 9 percent of the dealer-financed car loans in to date, according to Edmunds data.

Provided you can qualify for a zero-percent car loan, it sounds like a no-brainer. But is it really a good deal? Are there any catches? And if you were planning on paying cash, is it even worth considering?

How Can It Be Zero Percent?
Zero-percent loans are typically offered by automakers’ financing companies. They forgo the money they would have made on loans with interest in favor of selling more of a particular vehicle. This financing incentive can spark sales of a slow-selling vehicle or help clear out inventory to make room for cars from the new model year.

“The availability of zero-percent deals follow a pretty rigid pattern,” says Jeremy Acevedo, senior analyst for Edmunds.com. Zero-percent offers peak in the summer months to stimulate sales for the outgoing model year and stay “relatively subdued” in the other months, he says.

Carmakers advertise the no-interest loans in commercials, at dealerships or on their websites. We suggest taking a look at Edmunds’ Incentives and Rebates page. It highlights zero-percent financing offers and other promotions for the month.

Sometimes a dealership will offer its own version of zero-percent financing. In this case, the dealership opts to pay the interest on your loan, either to sweeten a deal or as an incentive for you to make a large down payment. It typically occurs when a buyer already qualifies for a loan with a low annual percentage rate (APR) and the amount being financed is a figure the dealer deems reasonable.

How To Qualify
Zero-percent loans are typically reserved for buyers with excellent credit. The fine print on automaker websites often says things like “for qualified buyers” or “based on Tier One credit.” The language doesn’t really spell out what that means in terms of FICO scores. And the range itself can vary from one automaker to another, so we suggest calling the dealership to see what the requirements are.

Just what is “Tier One” credit, for example? It’s a FICO of 690-719, according to one Washington state Toyota dealership that posted its credit tiers online. But that’s just one brand and one dealership’s numbers. According to credit services company Experian, 752 is the average credit score associated with loans that have an APR of less than 1 percent. As a general rule however, if your FICO score is above 700, you should be able to get a zero-percent loan.

If your score is slightly lower, zero-percent offers are still worth looking into. There have been cases of people getting approved because of a solid history of making payments on time and loyalty to a car brand — despite having a lower credit score.

Bonus Cash or Zero-Percent Loan?
There are times when the automaker gives consumers a choice between bonus cash or a loan with a very low interest rate. The bonus cash would usually be the way to go, but when it comes to zero-percent loans, the cash would have to be sufficient to offset the finance charges the buyer is saving.

For example, let’s say you were buying a $25,000 car with a $1,000 down payment and you’ve qualified for a loan with an interest rate of 3.5 percent. You then have a choice: a bonus cash incentive or a zero-percent loan with no additional discount. It would take an incentive of about $2,500 to beat the zero-percent loan offer. Any amount of bonus cash less than $2,500 makes the zero-percent loan the better option. Use thiscalculator to input your own scenarios and see what option works best for you.

There’s also a third option to consider. Increasingly, consumers are taking the bonus cash and then refinancing the interest-bearing loan at a lower rate later, says Melinda Zabritski, senior director of automotive finance for Experian.

What’s in It for a Cash Buyer?
If you planned on buying a car for cash, there might still be some value in taking out a zero-percent loan. The biggest benefit is that it allows you to keep your money free for other purposes, such as an emergency fund or for investment. There is no penalty for paying off the loan early. Having financed a car appears as a positive mark on your credit report. Buying for cash doesn’t show up at all.

In some cases, the dealerships may be getting an incentive from the automaker to promote a zero-percent loan, so taking the dealer’s financing may help you obtain a better price on the vehicle. The automaker typically pays the dealership a bonus on the back end of the deal, which in turn would allow it to be more flexible with the price. It isn’t a common occurrence, but something you should be aware of in case it comes up.

Good at driving tips

For this story, Edmunds.com asked bicycling advocates, bicycling-accident attorneys and other experts to give their recommendations on how drivers can coexist more peacefully with bicyclists. In a companion story, we outline bicyclists’ responsibilities. But for you drivers, here are our 10 rules of the road for driving near bicyclists.

1. Appreciate Bicyclist Vulnerability: A car weighs 2 tons or so, while the average bike is a mere 20 pounds, says Tim Blumenthal, president of People for Bikes, an advocacy group.

“In any collision, any physical interaction between car and bike, the bike always loses,” he says. “I’ve never seen a collision where the bike rider came out less injured,” he says.

Gary Brustin, a bicycle accident attorney in Santa Monica and San Jose, California, says he has seen the severity of the injuries to cyclists increase in recent years. Among the factors driving the increase, he suspects, are older riders, including baby boomers, whose bones may be more fragile than those of younger riders. An increase in high-speed roads with bike lanes also contributes to the rise, he says.

2. Know Bicyclists’ Rights: Drivers sometimes have little idea of the traffic laws that apply to bicyclists. A recent visitor to a message board discussing cyclists and motorists wanted to know why cyclists can’t just use the sidewalks.

In fact, bicycles in the roadway are considered vehicles. NHTSA says cyclists 10 years and older should behave as though they were vehicles on the street, riding in the same direction as other traffic that’s going their way and following the same traffic rules.

The cyclists, then, are on the same level as motorists. Information on the California DMV Web site spells out the law in the Golden State: “Bicycle riders on public roads have the same rights and responsibilities as motorists, and are subject to the same rules and regulations.”

The site encourages drivers to ”look carefully for bicyclists before turning left or right, merging into bicycle lanes and opening doors next to moving traffic. Respect the right of way of bicyclists because they are entitled to share the road with you.”

Nearly every state has similar language covering bicyclists, says Andy Clarke, president of the League of American Bicyclists.

3. Adjust That Attitude: Motorists tend to think of cyclists as ”in their way,” Clarke says. Rather, they should think of them as equals, just as entitled to the roadway as drivers are, says Clarke and other experts in the cycling community.

Drivers who get impatient with bicyclists might want to stop for a moment and think about the human being on that bike, says Bob Mionske, a Portland cycling attorney and cyclist: What if that rider was my friend, a friend of a friend, or a neighbor? Somehow, seeing bicyclists that way makes people a little more patient, he says. When drivers don’t humanize cyclists this way, he finds, they often perceive riders as mere objects.

If you can pinpoint the moment when a bicyclist is starting to irritate you — because you can’t see where he is going or because he’s moving slowly and is making you late — picture him as a family member or friend. That might calm you down, Mionske says.

4. Consider the Benefits of Bicycling — for Drivers: “One cyclist on the road is one less car,” Mionske says. Cyclists don’t wear out the road, he adds (which means fewer potholes for you). “We lessen traffic congestion,” he says. “We can’t pollute.”

So if you’re idling in your car behind a cyclist who you wish would go faster, think of it this way, Mionske says: “Well, he might be in my way temporarily. At least he is not in a vehicle and in my way the whole commute.”