Age Old Question: Lease or Buy?

car lease

When it comes to getting a car motorists these days have a number of options open to them. This includes purchasing a brand new vehicle, buying a used vehicle from a dealership, purchasing a used car from a private seller, or even leasing a vehicle. According to recently released data, the option of leasing a car is becoming more and more popular amongst motorists with many now choosing to do this rather than buy a car. However, some experts believe that this may not be the best move particularly over a long term.

The figures from Experian Automotive show that since 2008 leasing rates have increased by a massive 76 percent. Nearly one third of vehicle transactions in the final quarter of last year related to leases rather than purchases, reflecting the surge in popularity over recent years.

Pros and cons of leasing

Officials have said that leasing comes with both pros and cons, adding that motorists needed to ensure that they weighed all of the pros and cons up before making a decision with regards to whether they should buy or lease a vehicle. One of the key benefits of leasing is the fact that the driver regularly gets a new vehicle, which means fewer repair issues and problems to worry about. Another main benefit that draws people towards leasing a vehicle is that the monthly payment tends to be lower than payments on finance for purchasing a car on top of which there is no down payment required.

However, experts have said that there is also a downside in that many of those that decide to go for the leasing option get stuck in a rut where they continue leasing for many years to come. This is because they are not making any equity, which makes it hard to raise the money to put down a deposit and actually purchase a vehicle. Many also get used to paying the lower monthly cost that comes with leasing, which means that they are less likely to want to increase what they are paying out each month by taking out a loan to purchase a vehicle.

Another official added that lease companies were now pulling out all of the stops in order to encourage drivers to go for leasing rather than buying, which included offering a range of great deals and throwing in extras with the lease agreements. 

CFPB Tackles Payday Loan Lead Generators

CFPB

One of the unscrupulous business practices within the payday loan industry is lead generation. A trend that has been occurring is receiving sensitive personal data from payday loan applications and then selling this data to interested buyers. This is something federal officials are trying to rein in.

The Consumer Financial Protection Bureau (CFPB) launched a lawsuit in federal court against two businessmen who participated in this scheme of selling consumer loan applications. The federal consumer watchdog agency alleges that the accused selling the loans sold with the personal data did not assess the sources of the leaders or the parties they sold the information to.

According to a news release, the CFPB filed a lawsuit against Dmitry Fomichev and Davit Gasparyan (aka David Gasparyan), who co-founded and operated T3Leads, a lead aggregator. Ostensibly, the practice is legal, but companies are required to vet the buyers and sellers.

“T3Leads steered consumers toward bad deals with lenders it didn’t vet and with no regard for how the consumers’ information would be used,” said CFPB Director Richard Cordray in a statement. “This is a reminder to the middlemen who buy and sell consumer loan applications: if you engage in this type of conduct, you risk the consequences for harming people.”

What CFPB is against is that T3Leads did not know what promises were made to consumers or how the consumers’ information would be utilized. Since many of the buyers tend to be located in jurisdictions outside the United States or have affiliations with Indian tribes, many of these businesses can evade U.S. law and can stay out of the U.S. court system.

In the end, the CFPB argues that the firm violated the Dodd-Frank Wall Street Reform and Consumer Protection Act.

This comes as the CFPB has been making news for a new study and the proposal of national standards for payday loans.

Last week, according to a CFPB study, millions of Americans face excessive banking fees and even shutdowns of their accounts because of online payday loans.

The study garnered national media attention because governments at any level are having a difficult time tackling online payday loan businesses. However, Washington lawmakers are coming up with legislation to fight this.

Next month, the CFPB is scheduled to release an outline of how to bring lenders that offer loans for people with bad credit under the purview of the federal government. The national standards would effectively end state-level regulations, while coming up with a balance that protects consumers as well as honest payday loan businesses.

Activists, politicians, community groups and consumer protection organizations have been calling on the government to impose strict regulations on the payday loan industry for years. They argue that payday loans lead impoverished consumers into an endless cycle of debt because of exorbitant interest rates and fees. Proponents, however, argue that payday loans are a necessary and in-demand tool for millions of Americans, who may not have an emergency fund to pay for the rent or a broken down radiator.

Moreover, a spokeswoman for the Community Financial Services Association of America (CFSA), a trade group that represents payday lenders, says the industry works with consumers and their ability to repay the full principal amount. Payday loan borrowers also take into account the risks associated with the loan.

An estimated 16,000 payday loan stores are situated in the U.S., and hundreds are working online. The payday loan industry is a $50 billion industry, where 12 million consumers borrow money.

Student Loan Debt Shocks College Students

A multi-racial group of College students, male and female

A report has recently highlighted how many college students are experiencing various problems and issues when it comes to the loans that they have taken out for their education. Many students have found themselves lumbered with debt in order to fund their education and this has created concern amongst officials due to the rising cost of education and the ever-increasing level of debt being accrued by students.

The research was carried out by Citizens Bank, which recently revealed the results of the study. According to the data from the research, many younger people are having problems when it comes to recognizing what they owe and what rate of interest they are paying amongst other things.

Students unsure whether education was worth it

Officials that were involved in the research said that many students had no idea at all with regards to the amount that they had outstanding on their student loans. In addition to this, many were clueless with regards to what the rate of interest was on the loans that they had taken out. A higher than expected 60 percent of those polled as part of the study said that they didn’t have any idea with regards to when their loans would be paid off. One third said that they did not know how much interest they were paying on their loans.

The report went on to state that the average amount students owed when it came to student loan debt was around $41,000. For many, this will mean being in debt for years to come after graduating from college or university. In fact, some students are so worried about the amount of student debt that they have hanging around their necks that they have questioned whether further education was worth the cost.

One of the researchers said that it was extremely unusual for people to have such high levels of debt yet not have any idea with regards to how much they owed and what rate of interest was being charged. However, she added that this situation did seem to be commonplace amongst the student population, which was somewhat worrying.

When polled as part of the study, 57 percent of graduates said that they regretted taking out as many loans as they did while they were studying at college or university. Moreover, 36percent of graduates stated that if they had been more aware of the costs associated with college or university they would not have opted for further education.