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Jimmy,
Imagine that you are on the market for Accura TSX - the smaller of 2 Accuras available today. This car can be driven off the lot for $29K cash. Alternatively - Accura offers it with Accura financing at $500 a month for 60 months. Quick math says that 500X60=$30K, so you will pay $1000 in interest on roughly $30000 purchase over 5 years. That is 1.33% interest.
And the same car is also offered at $300 a month lease. In 3 years you will pay 300X36=$10800.
Which of the 3 options is the best is up to you. It all really depends on what your expectations of the future are.
In my opinion - economy today is considered still weak and government estimate of inflation is low. Offered interest rate on Accura reflects this view. In reality economy is not that weak, I believe that by the time election time comes at the end of 2012 - economy shall be officially considered fully recovered and inflation numbers will be very different. So offered interest rate of 1.33% for five years I consider a good deal, so paying cash is not an option I would chose. And a lease that allows me to make use of a car during 3 years (and those are best and most trouble-free years for the car) while paying about 1/3 of a total car cost is also a valid option.
As for "is $300 a month reasonable for a car?" - it all depends on a person. Surely there are cheaper cars, Accura TSX is what I would classify as "entry level luxury". Yes, you can get Civic for less but I don't fit well in civic and I don't like the ride in it either. I had cheap cars before, when you get older you are willing to pay for the comfort and quality of the ride, for the silence that comes with good sound insulation and suspencion. My current car is 10 years old Chevy Monte Carlo. Monte Carlo once was Chevy's version of a comfortable coupe. It was $23K MSRP 10 years ago when we bought it. Today it would have been about $30K factoring in inflation. I like the chevy and don't want to change the Monte Carlo but I don't expect 10 year old car to last much longer. I would be glad to buy Monte Carlo again but it had been discontinued. So I am looking for something in the similar price range. Accura is a valid candidate. And given the economic outlook, I think it might make sense for me to buy a car now rather than paying more a year later even though I think Chevy would still work fine for a year.
Imagine that you are on the market for Accura TSX - the smaller of 2 Accuras available today. This car can be driven off the lot for $29K cash. Alternatively - Accura offers it with Accura financing at $500 a month for 60 months. Quick math says that 500X60=$30K, so you will pay $1000 in interest on roughly $30000 purchase over 5 years. That is 1.33% interest.
And the same car is also offered at $300 a month lease. In 3 years you will pay 300X36=$10800.
Which of the 3 options is the best is up to you. It all really depends on what your expectations of the future are.
In my opinion - economy today is considered still weak and government estimate of inflation is low. Offered interest rate on Accura reflects this view. In reality economy is not that weak, I believe that by the time election time comes at the end of 2012 - economy shall be officially considered fully recovered and inflation numbers will be very different. So offered interest rate of 1.33% for five years I consider a good deal, so paying cash is not an option I would chose. And a lease that allows me to make use of a car during 3 years (and those are best and most trouble-free years for the car) while paying about 1/3 of a total car cost is also a valid option.
As for "is $300 a month reasonable for a car?" - it all depends on a person. Surely there are cheaper cars, Accura TSX is what I would classify as "entry level luxury". Yes, you can get Civic for less but I don't fit well in civic and I don't like the ride in it either. I had cheap cars before, when you get older you are willing to pay for the comfort and quality of the ride, for the silence that comes with good sound insulation and suspencion. My current car is 10 years old Chevy Monte Carlo. Monte Carlo once was Chevy's version of a comfortable coupe. It was $23K MSRP 10 years ago when we bought it. Today it would have been about $30K factoring in inflation. I like the chevy and don't want to change the Monte Carlo but I don't expect 10 year old car to last much longer. I would be glad to buy Monte Carlo again but it had been discontinued. So I am looking for something in the similar price range. Accura is a valid candidate. And given the economic outlook, I think it might make sense for me to buy a car now rather than paying more a year later even though I think Chevy would still work fine for a year.
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