A vehicle is one of the biggest purchases most graduates will make after college. Talking with a car salesman is one of the potential obstacles and can be the difference between your dream car or a car that shouldn’t even be street legal. To avoid making a bad purchase, here are some things to consider:
When leasing a car, the dealership basically buys the car for the customer and then leases the car to the customer in return for monthly rental payments. At the end of the lease, the financier gives the customer the option to purchase the vehicle in return for a final installment (residual value).
Alternatively, the customer may choose to “trade in” the vehicle, or re-finance the residual and continue the lease.
The annual percentage rate incorporates all these expenses and gives the customer a flat rate, including these hidden charges. Borrowing money to buy a car can be complicated, involving various down payments, monthly payments and repayment periods on top of charges that can vary by lender. By simplifying all these expenses, Congress intended in the Truth-in-Lending Act to give borrowers a way to compare financing options. Even if a sticker price looks attractive, the true cost of the vehicle includes the financing charges and interest.
Certified used vehicle
The difference between a “certified used vehicle” and just a regular used vehicle: Certified used vehicles are previously owned vehicles that have been inspected and guaranteed to be better than other used cars. Typically, they are less than three years old with less than 50,000 miles and are the cream of the crop. The best are certified by the manufacturer and are sold by new car dealerships.
The SIFE Financial Corner is created by members of UMKC Students in Free Enterprise.
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