Should You Lease A Car?

USA is about cars. We buy more cars here than anybody in the world. It is not uncommon for a house to have two cars where public transportation is not readily available. There are only three ways you can buy a car: finance, lease or pay cash. Yes, paying cash for a luxury used vehicle is the best option. But everyone doesn't have the ability to pay cash for a car. I am going to discuss why you should lease a car.
Before I discuss that you need to understand leasing and financing are completely two different way of owning a car. Depending upon your choice, how long you intend to keep a car, how much you want to pay on a monthly basis are factors on determining if you should lease or finance a car. I am going to discuss if you should lease a car.
Yes, you should lease a car. There are various advantages to it. 

New Car More Often

You get to drive a new car every two to four years depending upon the length of your lease. It is a advantage to you since you get to drive a car with warranty and never worry about major maintenance bills.

Lower Monthly Payments

You pay much lower monthly payments for the same car and same length of the term in compare to if you were actually financing the care. Since you only pay for the depreciation costs plus interest which equals to 30 percent to 60 percent less when you lease a car.

Lower Taxes

Since you pay for only a small portion of a car which you lease for the length of your term, you pay less taxes in oppose to financing a car where you pay taxes on full amount of the car.

Gap Insurance Included

When you lease a car, Gap Insurance is automatically included. It pays your balance if you owe more on your car than it is actually worth in case your car is stolen or totaled on an accident. Gap Insurance are not included when you finance a vehicle. Even though they cost less than four hundred dollars to purchase separately it is worth considering.

Removes Headache of Selling 

You simply turn your car back instead of trying to sell the car and getting worried about it. It is getting easier with companies like CarMax and Texas Auto Direct to sell a car. But they don't pay as much you would like for your car. Instead leasing just takes away that headache.

Flexibility to Buy

You have the flexibility to buy the car if you would like to own longer than the length of your term. It gives you the option to decide if you want decide with the same car or get a new one. 

You should lease the car ONLY IF

• Don't drive more than 15000 miles per year. You can purchase additional miles but you end up paying more.
• Want to drive a new car every two to four years.
• You have excellent credit. It is more easier to finance a car than leasing.
• You like making car payments on a regular basis in oppose to paying a car off and driving it longer.
• You don't mind the maintenance costs after the warranty expires.

Say No To Gold

Gold price is growing through the roof right now. People have already started to regret for not buying gold. Many believe gold is the safest investment with huge potentials. The increasing prices of gold does give an impression that it is a good investment.
But I would like to go over to point out why gold is a terrible investment. And if you are considering purchasing gold, just save your money. And if you have already bought, get rid of it as fast as you can. Gold is perfect as jewelry, of course  after diamond, but terrible as investment.
And why do I say that?
There are obvious reasons for it. I will quote Dave Ramsey, author of best selling book, The Total Money Makeover, who explained it very clearly on his radio show why gold is a terrible investment. There can't be any better explanation. He is right on point about it. I thank him for sharing with all of us.

My principle for investing in something is it needs to have a good long track record of a good steady rate of return without a ton of volatility. Gold as an investment, when you study its track record, sucks. It has made all of the returns it has made in the last seven and a half years. As soon as the economy stabilizes, the fear in the air will subside, and as soon as the fear subsides, gold is going to plummet. It's going to be at half of what it is right now in about 20 minutes. One hundred percent of the returns gold has generated in the past seven years are fear- based. It's people that are afraid the economy is going to collapse or they're speculating on people who are afraid the economy is going to collapse. That's what's driving gold's price up. It has nothing to do with the fact that gold is worth more.

Juxtapose that with something like stock in Home Depot or stock in Apple. It is worth more because the company has made more. There's an actual mathematical return and a reason for the stock to have gone up in value. That's what drove the stock. When stuff is driven to artificial lows or highs by fear or greed, that is called a bubble, and the bubble will always burst. You can't buy things based on fear or greed and call that an investment. At best, it's speculation; at worst, it's gambling.

Low return from Gold

As a matter of fact, I've become more and more sure every day that I'm not putting any money in gold. Now, had you put money in gold seven years ago, you would have made a fabulous rate of return to today. But had you put money in barrels of oil a few years ago, you would have made a fabulous return and then lost it all. If something's all in the news, you're too late to invest in it.

You need to do investing in things that are calm, steady and predictable. Gold is a precious metal; it has no intrinsic value. It shoots up based on fear or greed, and it will fall the same way. If you put money in it today, in five years, you will regret having done that.

Does a college student need a credit card?

Dave Ramsey, author of 'The Total Money Make Over' and radio host,  advises not to own a credit card if you want to live a debt free and peaceful life. I agree with him completely on living a debt free life but I disagree with him on not having a credit card. There are many advantages to a credit card. One of them being able to build a good credit score. You will need some credit to start off your life and put yourself towards success, unless you have the backing of rich parents or relatives. 

Do students really need a credit card?

Yes, every college students need to own a credit card, not to stack up debt but to build the credit score. Banks are getting really aggressive and creative in their efforts on marketing credit cards to college students, which many people see as a negative point. But you could really utilize that to your advantage by using the credit card properly and building a good credit score.  I really didn't see the importance of have a good credit score till I started working on Automotive industry. Many people were getting charged 17-24 percent interest rate on a car loan. Students come out of college with an expectation of conquering the world but they are disappointed when they start looking for a car as interest rates takes them backwards. In most cases, they need a co-signer or significant amount of money to put down to qualify for a car loan. You can avoid all those by building a good credit score.

How do I build my Credit Score?

The best way to build your credit score is to start off with a credit card. There are lots of responsibilities that comes with a credit card and you need to be extremely careful to not abuse it. There are many students who have credit cards for various reasons. The most important reason of all should be to build your credit score. According to Dr. Robert Manning, finance professor at the Rochester Institute of Technology and author of “Credit Card Nation,” nearly 14 percent of college freshman have at least two credit cards. That number more than doubles (29.8 percent) among seniors. But less then 2 percent know the importance of credit score. Paying your credit card on a timely basis and never missing the payments is one of the major cause for good credit score. You should never miss the monthly payment on the due date. However, if you do miss it, make a point to pay it within 30 days of the due date. You will have to pay a late fee but it wont put any negative on your credit report. Paying your credit card on full every month should be your focus though. The point is not to stack up debt on the credit card but to use it wisely to build a good credit score.

How do I get a credit card? 

You might be wondering how can you get a credit card when you don't have any credit. I was in that situation too when I started out. My parents didn't want to co-sign for me, which I tell all parents to completely avoid doing so, so I applied on my own. I was fortunate to get $300 credit card from US Bank. Now, I have various credit cards from Capital One, Chase, Discover and so on.There are lots of banks who will take a risk on you and start with small amount. The key here is to use it properly and they will increase your credit amount on a gradual basis. Even secured credit cards are best way of building your credit score. They are same like a regular credit card, except you have to give money to the bank as a security deposit. If you use it wisely, the bank will convert it to a regular credit card within a year and return your security deposit. I highly advise people not to get any credit cards with annual fee and activation fee when there are plenty of banks that don't charge any fee.

What benefits do I get on having a credit card on college?

The financial arm of Honda, Honda  Finance Company runs a program to reward recent graduates with good credit score to get APR as low as 0.9 percent on a new car. If you have graduated in the past two years or will graduate in the next four months with a master's, bachelor's or associate degree and have 710 credit score, you will get the lowest interest rate. But the same is not available if you don't have any credit to start with. 

Even though, I didn't know much about the importance of having a good score, I ended up having a score about 700 when i graduated from college. It helped me a lot when I financed my first car. Yes, I did want to pay cash instead of financing but I didn't have extra cash on hand to pay for a car. Having a good credit score during college helped me borrow 6k and convert to over 50k from stock market. How I made that happen is the topic that I will discuss on another blog. 

There are many benefits of  having a good credit score besides getting a car. Many companies have started checking the credit report before they hire someone. It's common sense for any company to know how you handle your personal finance if they are to hire you to take care of their finance.

Why all the fuss about banks targeting college students on congress?

Congressman are basically forgetting that students are responsible to take USA forward from where it is now. They want students to take care of all the responsibilities starting with living away from home, dating, having the right to vote,  and start on a journey to build their career. But in the same time, they want students to stay away from taking care of their personal finance. No, credit cards are not responsible of building personal finance but it does give students insight on the finance. You cannot handle money once you start earning 50k, 60k, and up if you never had the responsibility of borrowing the money and paying on  a timely basis. This is why there are many people who make a lot of money but are still broke on a higher level. 

College is the best time to learn about your major and have good GPA. It is also the best time where you can start learning the responsibilities of your personal finance. You will have a head start on handling the significant amount of money that you will be making after graduation, unlike other who have never taken responsibility of the money. Even,  if you do mess up you do have time to take care of your mistakes while you are still in college. It is not pretty to mess up when you are married and have kids to take care of.  And once you start working and living your life, you will soon find out your credit score is much more important than your GPA.