Do The Math & Don’t Be Fooled By Biweekly Payments

Today, most new car dealerships and manufacturers offer payment solutions for every buyer.  I get paid once per month and therefore Monthly Payments work best for me. Many buyers get paid twice per month, on the 15th and 30th, so Semi-Monthly Payments make more sense. The majority of people however, get paid every second Friday, and for those buyers, Biweekly Payments are ideal.

Almost all of the individuals and families that I speak to have set a monthly budget and know what they can afford to spend for food, rent/mortgage, clothing, fuel and their car payment(s).  They go to the dealership with this number in mind, but aren’t aware of how their monthly budget is converted to a Biweekly Payment.

At LeaseBusters, we convert all payment frequencies to monthly so buyers can stay within their budget and easily compare payments of one vehicle to the next.  The majority of people that I speak with don’t know how to do the conversion calculation and think that their Biweekly Payment is simply doubled to convert to the monthly payment.  Unfortunately, this doesn’t equate. There are 52 weeks in a year, therefore 26 Biweekly Payments. If you multiply your Biweekly Payment by 26 and divide that number by the 12 months in a year, you have the correct Monthly Payment conversion.  For example, if your Biweekly Payment is $200.00 x 26 / 12; your Monthly Payment is $433.33. If your monthly budget is $400.00, you need a Biweekly Payment under $184.62, (e.g. $400 / 26 x 12).

It’s easy to get caught up in the excitement of buying a new car!  Many families stretch their monthly budget to get the vehicle that they really want.  If the dealer has quoted you a Biweekly Payment, either do the calculation, or if you can’t remember how to do this, ask them to document the monthly equivalent.  This way, you won’t be fooled or misinformed.  

By: Randy Warren

Car Leasing & Winter Tires

It is both interesting and perplexing why the new car automakers have not become heavily involved in a new car winter tire package on the vehicles designated for sale in Canada.  The leasing community which represents the majority of premium and sporty brands of the new vehicles sold in Canada are in need of some innovative and creative solutions regarding winter tires and vehicle leasing.

It is no secret that Canadian weather patterns consists of several winter months that include snowstorms, cold temperatures and snow-packed roads (perhaps parts of southern BC and Vancouver Island could be exempt from this winter statement but let’s agree that Canada is a distinctly winter country).  It’s also very evident that the tires installed on the vast majority of new vehicles sold in Canada would be considered “summer” or “sport” tires despite the “all season” moniker that many tires have. In other words, the OEM tires that new cars are delivered with are not very effective in the snow, ice and temperatures below 5 degrees C.

Jim Matthews, President of LeaseBusters stated; “I can’t speak for all new car buyers but I can certainly relay my experience with customers who take over leases.  The vast majority of lease transfer ‘Buyers’ want winter tires and actually try to negotiate incentives based on their desire for these tires, especially during the winter months”.  Matthews went on to say that “winter tires are not only a fantastic safety feature for vehicles, they’re also a strategically sound lease investment since most original sets of tires will not survive the full term of the lease whereas a set of summer and a set of winter tires should last the full term of most leases”.

Here’s where the automakers and their dealership network can become trendsetters in the leasing community.  Automakers can use their extensive buying power to acquire above average grade winter tires, steel wheels or an upgraded alloy wheel that dealers can order as an optional feature for their vehicles.  OEM’s can also make these features a dealer installed items that can be ordered through the dealership’s parts department. Factory leasing companies can now authorize winter tire and wheel packages to become part of the new vehicle and thus be eligible to be part of a factory lease package (i.e. part of the MSRP, the residual value and the lease payment).

Winter tire and wheel packages should be part of leases but alas, after researching several OEM dealerships, not one automaker offers this factory option however until that happens, many dealerships offer winter tire packages through their financial services office at the time of sale.  This offer allows leasing customers to add a winter tire and wheel package to their lease payment and be protected throughout the term of the lease. As mentioned, this option will allow both sets of tires to survive the term of the lease and the package can be amortized for the full term of the lease using factory subsidized interest rates.  This is not a perfect solution but it is much better than customers scrambling to find their tire size in stock in mid-to-late November and paying a premium for winter tires.

Other significant advantages to the OEM solution winter tire package solution indicated by Matthews:  “Having winter tires as a factory option converts this option as relevant throughout the spring and summer market (when customers aren’t thinking about the winter) and as importantly, it makes the lease more attractive in the lease-take-over marketplace and lastly, the winter tires can also be insured through the end of lease excess wear and tear protection that can be purchased at the lease’s inception”.

In the end, winter tire and wheel packages should become a mainstream factory option for all new cars sold in Canada.  It saves lives, lowers insurance rates and reduces driver anxieties during winter driving; all pretty darn good reasons for automakers to consider or reconsider this initiative.

Car Leasing for Seniors

Although the Canadian population may be aging, Canadian senior seniors are aging vibrantly, gracefully and independently. 

As an example, Jim Matthews cites, “Recently, my 86-year-old mother had to give up her driver’s license due to some minor medical issues.” Matthews, the President of LeaseBusters, notes, “She decided not to try to write the test to get it reinstated; it was a personal decision but I believe she was getting tired of the new stresses of driving on the streets of suburban Toronto.”

What happened to Jim’s mother is becoming increasingly commonplace amongst our senior community that are still healthy and active enough to drive their vehicles.  One day his mother was fine, the next day she was without a driver’s license and being subjected to an unexpected test.

The reality of her situation and the situation of other seniors is that they should continue to drive and enjoy their lives to the fullest – however, be prepared for the day when they have to “hang up” up their car keys and look to taxi services, Uber and family to help them with their transportation needs.

Which brings us to the most important component of seniors driving automobiles; the actual vehicles they are driving.  Seniors should be driving newer, reliable, safe and technologically savvy vehicles in order to keep them, their passengers and other drivers on the road confident.  Features such as blind-spot warning lights, lane departure warning monitors, autonomous braking to avoid crashes, rear camera are just a few features that make our drivers and our roads safer.  Unfortunately, many of these options are available on newer cars that are often expensive to buy but reasonably priced to lease.

Additionally, most seniors are on fixed incomes that are predicated on interest or dividend income resulting from shrewd investment opportunities.  Seniors shouldn’t be depleting the capital inside of these investments to purchase a new car; they should be using the investment income to pay for the lease’s monthly payment.

And finally, as was discussed from the onset, a senior’s life can change in an instant and they could find themselves in a position where they cannot drive their newer reliable vehicle.  If they owned the vehicle and were forced to sell it; they could lose between 25% and 40% of what they paid for the vehicle. If they were leasing the vehicle; there are services available that will find a new buyer to take over the balance of the lease and only obligating the senior to pay some administrative fees to exit their obligation.

In the end, leasing new cars for seniors (rather than purchasing them) is a very positive step in safer roads and preserving the needed capital for seniors to be self-sustaining members of our society.  For many seniors or people who have aging parents; when the discussion of reliable vehicles come up, this topic should be on the agenda.

Article by: Jim Matthews