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"Nick's Nickel's Worth"
By:
Nicholas T. Simonic, CPA, MACC
Q. " Hey Nick, I can get a good deal on leasing a car for only
$249.50 a month. Should I do that or buy a car"?
A. Dear Renter: Don't be a renter! Leasing a car is renting an asset.
Leasing a car costs more money than you think. Besides, your lease
payment is being used as rent on equipment that you can't sell when
the lease is up. There are also a lot of hidden charges on leases.
Some are as follows:
1. The lease payment is subject to sales tax.
2. Because the payment is subject to sales tax, you are paying sales
tax on the effective interest as well. Lease companies have interest
built into the payment. That is how they make their money.
3. A 30 year old person can structure a plan to buy a car for cash
and build an investment portfolio of over $1,000,000 by the time they
retire, just by making the car payment to themselves.
4. When leasing a car, the lease company usually charges ten cents
per mile in additional charges for any miles in excess of 15,000
miles per year.
I hope the above helps you to make your decision.
For
information about Nick's Nickel's Worth, contact our Managing
Partner at simonic@simonic.net
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