Saturday, August 9, 2008

Financial Illiterate People

As I am in the market for a new car - which is about every 6 months for me, I know I have a problem and I will seek treatment soon - I was perusing a couple of lease swap websites. This is where people can transfer their lease over to someone new. And for someone like me who likes changing cars often, it would be nice to take over someone's lease with only 6 or 9 or 12 months lest and not commit to something longer. Well so much for that idea.

The people who have leases to unfold, are for the lack of a better term, complete effing idiots. A lease is at the very basic level, payments for depreciation of a car during the lease period with a little interest thrown in. What I'm seeing though is bewildering. People with 5 year leases on a Honda Civic DX with a $300 payment and a $10,000 residual value. Which means that for a car with an MSRP of $17,000, the lessee is making $18,000 worth of lease payments and then if he wants to keep the car has to pay another $10,000 at the end of the lease. $28,000 for a car with an MSRP of $17,000. And this doesn't include fees involved at the start and end of the lease which could be another $1,000 or more.

And then you have the other end with leases of $1900 for 36 months for a Range Rover. $68,400 worth of payments to keep a $75K car for 3 years.

I can only guess what % of these morons are proudly sporting a "HOPE AND CHANGE" bumper sticker on said leases. Just vote for the Messiah and he will make that payment affordable in no time. Hell he may even pay your lease outright, after all he's paying your health insurance, paying a good chunk of your mortgage and soon enough will be sending you a check from Exxon's bank account for your gas.

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