Is leasing a car, rather than purchasing a car on time payments a good thing or not. As with questions in life, it all depends on your financial and/ or automotive situation and as well who tells the story.
It is true that business can write off lease costs whereas that is not such an advantage to an individual car user. However this is not necessarily so. First it all depends on your situation and as well you’re negotiating skills. It is always better to be in an informed and prepared manner.
First of all leasing a car is downright attractive due to current low interest rates. Almost every month you will read in the popular news that the “Fed has cut interest rates again”. What this means to you is that in an overall sense that interest rates are less to you. This should mean lower leasing costs to you. If interest rates, in the banking industry and market are lower, so should be the interest rate basis in your lease negotiations and payments.
What are the advantages of leasing a vehicle? You will get a new vehicle to drive. When your leasing agreement term is over – then you hand the car in and walk away.
It may be debated that by leasing the car you will have no equity or asset accumulation left at this point in this automotive transaction. If you had bought the car, with payments, the car would be yours at some point, lock stock and barrel.
However major components and overall costs of running a car are maintenance costs. With a new vehicle – it is unlikely that you will incur these costs. First of all the car is new. Major repairs and costs are unlikely. In addition the car will come with a manufacturer’s warranty which should cover you for the majority if not all of the lease time period.
With modern, newer and especially smaller cars it seems that all repairs seem to be very expensive. After a certain point of time, use and mileage, it is not as if the car “nickel and dimes” you to death. Most of the innards of modern cars seem to be electronic in nature with advanced (read expensive and hard to fix) modules. There are few simple to repair mechanically based, non electronic component, cars. In addition for mechanics to work on cars now “everything is struggle’ “and as well spaces are tight and very hard to work within. In a summary the old “nickels and dimes” are now “five hundreds, thousands and several thousands”. With a leased car arrangement you may not own the car, with its equity. Neither do you have repair costs and heartaches. In addition you have a reliable vehicle to get you to work or to chauffer around your family.
There are several terms and factors to be knowledgeable about in your calculations and comparisons for auto purchase versus lease workup and lease negotiations.
First of all research the leasing tax rules in your jurisdictions. For example in your state you may well only pay sales taxes on monthly payments, not on the cost of the vehicle. It all depends on the negotiations of your payments- which involve the time frame and value of the car at the take back time end of lease.
Next what are the fees? For example the fee at the end of turn in, paperwork fees and fees for “excess miles”. Are these negotiatiable? In the case of the “excess mileage” and “excess mileage fees” are these carved in stone or can the allotment or rates charged be reduced? In the case of the “turn in” fee. If you offer to increase your monthly payment – often this fee will be reduced.
In order to best negotiate you will have to speak the same language and terms as the lease negotiator. Several terms to know, comprehend and understand are “Capitalized Cost”, “Money Factor” and “Residual Value”.
Simply put the cost of the leased vehicle is confusingly described as the “Capitalized Cost”. Just as you would haggle over the cost of buying a new car, you should not accept a stated price or manufacturers suggested retail price (M.S.R.P.) as the price paid.
Haggle and argue over the “Capitalized Cost” just as you would in any car or automotive deal.
Next in line in proper automotive leasing terms is the term “Money Factor”. “Money Factor “is the interest rate upon which the leasing calculations are based upon. The lower the number of the “Money Factor”, the better for you. As a rough guide and estimate multiply the “Money Factor” value by 2550 to get an estimate of the relevant interest rate.
Last in the line of leasing and leasing lingo is the term “Residual Value”. “Residual Value” is the amount that the car, S.U.V. or truck vehicle is said to be worth at the end of the lease period. Simply put, the more the vehicle is deemed to be worth, at this time period, the less will be your total amount due to be paid overall for your lease. Thus the higher the “Residual Value” at the end of your lease, the much lower will be your monthly lease payments.
In the end, your car purchase or lease decision will come down to two factors. Reliability of transportation and the total cash outlay from your personal pocketbook or wallet.
It’s important to create a rental agreement for your vacation rental business so that you can get everything in writing from your guests. You should clearly outline the expectation for you and for your renters so there are no disputes down the road.
Below are 10 must-haves for your vacation rental contract:
1. Maximum Occupancy and Age Requirements. When going through the screening process for your vacation rental guests, you should be able to determine a rough estimate for their age and how many people will be staying in your vacation property. However, your vacation rental agreement should remind renters of your rules for required parental supervision of designated age groups, along with the maximum occupancy of your home in case they are considering bringing any extra guests.
2. Check-in and Checkout Dates & Times. To coordinate your cleaning and housekeeping duties, you’ll need to clearly communicate the check-in and checkout dates and times. In the event of early arrival, the house might not be clean and could result in complaints. If your guests stay too late, your housekeeper might not have time to sufficiently clean your vacation home before the next group arrives. Your renters should be made aware of these important times, and your vacation rental lease should state the penalties if these times are not observed.
3. Cancellation policy. Your vacation rental contract should spell out the penalties according to the time frame in the event that a renter needs to cancel his or her reservation. As the date of the reservation nears, it will be increasingly more difficult to fill those dates with other renters. Therefore, the penalties should be higher as the date approaches.
4. Total payment due. You can not rely on your renters to write down prices from your vacation rental listing or during a phone conversation. The total rental rate, including all fees and taxes, should be included in your vacation rental contract.
5. Payment schedule. Just because the renters know the cost of your property does not mean they know your deadlines. Your vacation rental contract should provide a timeline for payment due dates, including deposits.
6. Pet Policy & Smoking Policy. It is up to you to let renters know about restrictions regarding pets or smoking at your vacation property. Just because a renter says that he doesn’t plan to bring a pet, you should still spell out your rules in your vacation rental agreement in case he changes his mind. Also, it cannot be assumed that people will be simply know to not smoke in your home. Your vacation rental lease should define the penalties if it is determined that a renter has smoked inside your vacation rental.
7. Checkout Policy. As soon as your renters arrive at your vacation home you should tell them what is expected at the time of checkout. Let them know in your vacation rental contract whether they need to wash sheets, take out trash, etc., so there is no confusion on the day of checkout.
8. Weather policies. Vacation rental owners should use their vacation rental agreement as a form of protection in the event of inclement weather or Acts of God. Spell out your storm and hurricane policy up front to avoid disagreements about refunds later on.
9. Requirements for security deposit refund. When renters pay the security deposit for your vacation rental, they should be aware of what is covered and what is expected of them in order to receive a full refund. Your vacation rental agreement should also explain the penalties for violating these rules.
10. Your contact information. Although it seems obvious, your vacation rental contract should include all of your contact information and emergency contact information, including the address of the vacation rental home.
Your vacation rental agreement should be as specific as possible and include detailed information to protect yourself and your renters.
Worrying whether or not you were overcharged for your car repair is an awful feeling. There’s tons of advice on how to avoid getting ripped-off, but few discuss the actual car repair prices. We really need to look at the charges on a car repair estimate or auto repair invoice to determine if we’re paying too much.
The focus needs to shift from giving outdated and ineffective advice to addressing the “actual” and “specific” charges. Are they legitimate charges? Can they be justified by industry guidelines?
Now car repair estimates can be confusing. So let’s break it down to get a better idea if your auto repair shop is billing you appropriately.
First, a glossary of terms is in order, as the auto industry has a language of its own…
Aftermarket Parts: parts not made by the manufacturer.
MSRP: Manufacturer’s Suggested Retail Price
OEM: Original Equipment Manufacturer. Manufacturer approved parts designed specifically for your vehicle.
TSBs: Technical Service Bulletins. Notes and instructions provided by the manufacturer for known and specific concerns(they are not recalls).
Flat Fees: services such as alignments that don’t get broken down into parts, tax, labor
Miscellaneous Charges: these can include, but are not limited to shop supplies – rags, chemicals, hazardous waste disposal fees, waste oil …etc.
Labor Rate: a repair center’s hourly charge to service your vehicle
Labor Time: the amount of time or hours determined that it will take to fix your vehicle
Labor Description: the step-by-step written details of repairs and/or services
Ok, let’s look at the Anatomy of an Auto Repair Estimate:
There are six basic components to a car repair estimate
1) Customer/Vehicle Information
2) Parts
3) Labor
4) Miscellaneous Charges
5) Flat Fees
6) Summary of Charges
Customer and Vehicle Information
Using a generic “top down” style estimate, the top portion simply contains your personal information and your vehicle’s specifics: year, make, model, mileage…etc, as well as your request or concern.
We also want find the shop’s labor rate. The labor rate is critical in determining if you paid too much. Most repair centers don’t list the labor rate. We’ll discuss why shortly.
Auto Parts
Parts are listed usually with a brief description, as well as the quantity, and the price. There are three types of parts: OEM (parts made by or for a manufacturer). These are the parts installed by a dealer, although many local shops use OEM parts too.
Aftermarket parts are non OEM parts, and there are various degrees of quality, depending on the brand and where they’re made – China versus USA, for example.
Then there are Used parts purchased from a salvage yard.
To determine if you paid too much for parts, first find out what type of parts are being used. With OEM parts, you don’t want to pay more than MSRP, although most people do without realizing it. Premium aftermarket parts are similarly priced across brands, although beware not to pay more than MSRP, which again, many folks do. Used part prices are all over the place, so pick the price in the middle.
Auto Repair Labor
Labor is billed in tenths. So 1.0 equals 1 hour. 1.5 equals an hour and a half.
Labor rates range from $60 to $100 per hour at local repair shops and $80 to $140 per hour at the dealer level. Labor times are based off established industry guidelines, which are frequently abused.
If you don’t see the shop’s labor rate posted on the car repair invoice, ask your service center for the rate. Repair shops can manipulate the labor rate (among other things) with a labor matrix. Matrix pricing is a complicated and ethically questionable practice discussed at length in RepairTrust literature. What you need to know is that you can pay as high as $150 per hour rather than the posted labor rate of $105 per hour.
To ensure that you’re being charged properly, you’ll want to multiply the number of hours billed (which is also often not posted) by the shop’s labor rate.
Most labor descriptions are poorly written and difficult to understand. So ask questions.
Here’s a “clear” labor description for a 30,000 mile service on a Toyota Camry.
Performed 30,000 mile service per customer request, and in accordance with manufacturer guidelines. Changed oil and filter, installed new air filter, cabin filter and performed all necessary tests, checks, and procedures, including road test (miles 30,123 – 30,125). Performed lubrication services and confirmed proper vehicle operation. Set tire pressures, and checked fluids, belts and hoses. Note: vehicle is pulling slightly left. Needs alignment
Miscellaneous Charges
The bulk of your car repair invoice will be parts and labor, but we can’t forget about Miscellaneous Charges. These charges can include, but are not limited to, shop supplies – rags, chemicals, hazardous waste, disposal fees, waste oil …etc. The latter of these may be billed out separately in a summary at the bottom of your repair invoice.
Very few of these “extras” are actually used during regular repairs. Miscellaneous charges are calculated off the amount of labor hours billed, not the amount of miscellaneous items used.
Flat Fees
Flat fees can be another very tricky area. Flat fees are services, such as an alignment, which don’t get broken down into parts, tax and labor. This makes it difficult to determine the real and fair price. On the plus side, most flat fees are competitively priced.
Be warned however, another term for Flat Fee is called Menu Selling. In other words, you might see Tune Up: $99.99 or Transmission Flush: $89.99. Follow your manufacturer’s recommendations only, not a dealer’s or repair shop’s menu.
Summary of Charges
The last part of an auto repair estimate is the summary of charges. It’s usually found in the bottom right hand corner of the invoice. Check it against the charges above to ensure that it all adds up mathematically, as well as logically.
This basic estimate outline may differ from your particular invoice, which may have other categories such as “Sublet” or “HazMat.”
A sublet charge is added when your auto repair shop uses another vender to fix or repair your car, such as a glass company that replaces your windshield.
A HazMat charge may include waste oil or other disposal fees. Just make sure that the charges are warranted, as again, they too are often calculated off the labor time rather than actual need.
In sum, understanding the “actual” charges, asking the right questions, and breaking down your auto repair costs is the best way to avoid paying excessive car repair prices.