Published: Friday, October 5, 2007
Program offers facts about life after college
A vehicle typically depreciates by 30 percent once it leaves the car lot.
By VIRGINIA ROSS
NEW WILMINGTON, Pa. Most people will spend most of their lives making car payments, automobile dealer Michael Hietsch told a group of young adults at Westminster College on Thursday.
Hietsch, general manager of the Phil Fitts automobile dealership in New Castle, said the average person looks at making years' worth of monthly payments when buying or leasing a vehicle.
"You just have to do your homework and know your options," he said. "Unless you're one of those few people who can walk into a car dealership, write a check and leave with the vehicle paid in full, you're looking at financing or leasing your vehicle."
Hietsch spoke as part of the college's "Get Real!" life preparation program. Sponsored by the Office of Student Affairs, the series is designed to acquaint students with life after college. Topics include advice on financial planning; banking; medical care; consumer and personal legal matters; apartment, auto, and house hunting; getting the most out of leisure activities; and preparing for lifelong relationships.
"The goal is to help students with practical information they can use after graduation," explained Rachel Lantz, a resident director at the college and a coordinator of the series. "It goes beyond what you learn in your regular classes."
Buying versus leasing
Hietsch's presentation, "Wheels and Deals," focused on buying versus leasing a vehicle. He outlined the pros and cons of each option.
He said that a consumer is likely to pay less for a leased vehicle on a monthly basis, but a leased vehicle must be given back to the dealer after three years.
"People think, though, if they lease a vehicle they never really own it," he said. "But if you finance a car, you never own it anyway. The bank owns the title until the loan is paid."
He stressed that each time a consumer trades a car in and gets a new loan for another vehicle, the balance of what is on the previous loan is usually added to that loan. Hietcsh reminded the students that a vehicle typically depreciates by 30 percent once it is purchased and leaves the car lot. It will depreciate another 20 percent within another year, he noted.
"You need to take care of your vehicle," he said. "The better condition your car is in the better your chance of getting a decent trade in."
He advised the students to make sure a vehicle is clean and detailed before taking it for a trade-in and it doesn't hurt to bring along receipts and records of maintenance done on it.
"It's your money," he said. "You want to get the most you can for your trade in. But you need to be practical. When I look at a car, if it's not clean and a mess on the inside, I'm likely to think it hasn't been well maintained. Invest in cleaning and maintaining it."
He said when it comes to leasing, ask what the selling price is based on, what incentives such as rebates are available and what the trade allowance is.
"A lot of people don't know the terms of leasing are negotiable, but everything is negotiable," he said.
He said there are two rules of thumb the students should note. Everyone should check out what the value of a vehicle is before trading it in. He also advised the students to invest in gap insurance, which covers the difference between what a consumer owes on a vehicle and what an insurance company says that vehicle is worth.
"It's just a wise move when you buy a vehicle, because of how fast that vehicle is going to depreciate," he said. "That way you're covered and you don't have to worry. It's a few extra dollars a month and it just makes life a little easier."