Leasing a Used Car as Opposed to a New Car
By Edward Pacheco
In today’s difficult economic times there is definitely something to be said for leasing a used car as opposed to a new car. In short, leasing a used car will provide the buyer with an opportunity to get the new truck or sedan that they want without having to fork up a ton of money. Leasing used is something that has not been popular in the past, but it is slowly starting to become more relevant.
The reason: most of the time the dealership that gets a lease turned in will sell it outright as used or CPO.
Once the car is sold, the dealership stands to make a nice profit. However, leasing used cars has become more relevant because with the slow economy it is a way for these dealerships to move inventory off their lot (to make room for higher margin offerings) while still making a profit. The benefit for the buyer is that they get a car that’s like-new at a lower price than they could if they were buying (or leasing) new.
When leasing a used car you will be locked into to a contract that will last, in most cases, 36-months, just like a new car lease. Over the course of those months you are mostly paying for the depreciated value of the car. In other words, you are not paying for the whole price of the car, just the portion that you use. This is ideal for those who can’t find a car that fits them at their price point.
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Writing a successful budget
The key to writing a successful budget lies in the detail as a budget relies on making sure that all income and expenditure items are accurately assessed and included so as to ensure that nothing is missed.
Perhaps the most straightforward place to start is by listing all sources of income, be it is salary, bonus or interest from savings or from a pension it is important to know what you have to spend before you get to spending it!
As with any budget, looking at too short a period can mislead as the timeframe may not include all payments, for example, some income may come as annual bonus or in quarterly interest therefore look at the whole year where possible to determine an average month.
This will give you an idea of what needs to be saved in months where there is a bumper income and help understand why you may run out of cash at other times.
Next is to get to grips with the outgoings. This is usually harder since not everyone keeps a handle on what they spend and where. Start by taking the big costs like mortgage or rent payments. These will be followed by utility bills for electricity, council tax, gas and telephone.
Looking over a year will also help to remember items like household and car insurance bills. Remember that as part of the budget process you can use a comparison website such as Moneysupermarket to check if you are getting the best deal.
The next layer of cost is usually more difficult to assess since it covers items such as food, clothing and entertainment. Analyse credit card and bank statements over a long period to get an accurate feel for real expenditure rather than guessing.
Remember that any budget will never be 100% accurate – that is not really the purpose. It is to provide you with a guide to where your money is spent and what you have left over to save or spend on luxuries. Using comparison websites as a reference guide can also show ways you may be able to spend less and earn more.
Armed with a good all-rounder comparison website, your salary slips, credit card and bank statements it should be a straightforward task to create a family budget that optimises income and expenditure. These days, that can be the difference between a comfortable lifestyle and struggling to make ends meet.
Choosing the Right Debt Solution
People in debt are often confused about the right way forward – the right way to work on repaying those debts and getting their finances well and truly under control again.
It’s true that there can be quite a few ways of doing this, but choosing the right debt solution for you needn’t be as complicated as you might think.
Why? First of all, because you have access to expert advice – all kinds of organisations offer advice over the phone or face-to-face, and you’ll find all kinds of guides online. And secondly, because quite a few of those debt solutions wouldn’t even be an option for you.
If you’ve never really looked into the subject before, debt consolidation loans may be the only actual debt solution you’ve even heard of. But do you know how they work? Do you know if a debt consolidation loan would be right for you? Do you know how the interest issue would work out?
Watch Your Savings
With so many savings accounts available it’s often difficult to know which one to choose to get the best return on your investment. And as they all offer varying degrees of flexibility, as well as varying degrees of interest, it’s important to know what to look out for when choosing where to invest your money.
Below is a list of what to watch out for when looking for a savings account.
INSTANT ACCESS OR NOTICE ACCOUNTS
Before choosing a savings account you should have a clear idea your savings goal, that is, what are you saving for and a rough idea of how long will it take you to meet that savings goal. And with this you will need to decide whether you will require regular access to your funds or whether you can afford to have the money ‘locked in’ over a period of time.
If you are saving for an emergency fund or simply feel that you may need to have access to your funds at any given time then you will most likely be better off saving in an easy or instant access account. With such an account you have constant access to your money and can draw on it at any time without incurring a penalty fee. The downside is that this convenience is usually offset by a less attractive interest rate.
If you have a longer term savings goal and are confident that you will not have to break into your funds early then you may be better off putting your money into what is known as a notice account.
These are simply savings accounts that require you to give the bank notice of your intentions to withdraw money. For example, if you have a 90-day notice account then you would have to notify the bank 90 days in advance before you could withdraw money without being charged a penalty fee.
Although this is inconvenient, notice accounts traditionally have a better interest rate than instant access accounts.
INTRODUCTORY RATES
Some banks will offer an introductory rate that will give you a preferable rate for a set period of time as an incentive to save with them. Since base rates have dropped to all time low levels these types of introductory offer are now more attractive than in the past as guarantee a minimum rate of return on your investment.
It is important to take note of how long the introductory offer is and whether you can easily move your cash without a penalty charge being imposed once the special rate has ended as you may lose out in the long run if this is not the case.
WITHDRAWAL RESTRICTIONS
Some banks will limit the amount of withdrawals you can make in one year and impose penalties for going above this limit.
Other accounts may have restrictions that will limit any interest paid during a month that a withdrawal is made. For instance, the terms may state that if you withdraw money from your savings account then no interest will be paid on money that remains in the account.
This can prove costly if you lose out on interest on thousands of dollars for the sake of a withdrawal of a couple of hundred dollars.
TAXES
When there is money to be made then the tax man is never far away and so it’s important to check what the after tax interest rates are on a savings account, particularly as rates are usually quoted without tax to make them appear more preferable.
And unless you are putting your money into one of the range of ISAs available then your savings will fall foul of the tax man.
The general rule of thumb is that basic rate taxpayers will pay 20 per cent on any interest earned, higher rate taxpayers pay 40 per cent and top rate tax payers lose 50 per cent of their interest.
So, as you can see, saving money is not quite as straightforward as you might think and it always makes sense to check the terms of an account to make sure you receive the best return on your investment.
