Finance Xpress

Season 6, Episode 52

This week on Freakonomics Radio: the Montgomery Bus Boycott, the South African divestment campaign, Chick-fil-A! Almost anyone can launch a boycott, and the media loves to cover them. But do boycotts actually produce the change they’re fighting for?

Also, we speak with the editors of an unusual book called The Encyclopedia of Ethical Failure, which catalogs the fiscal, sexual, and mental lapses of federal workers — all with an eye toward preventing the next big mistake.

To learn more, check out the podcasts from which this hour was drawn: “Do Boycotts Work?” and “Government Employees Gone Wild.”

You can subscribe to the Freakonomics Radio podcast at iTunes or elsewhere, or get the RSS feed.

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When it comes to homeowners, renters, or property insurance, you’ve got a lot of choices to make. How much coverage do you need? What deductible can you afford? Which possessions or parts of the property need covered? One of the biggest choices is one that very few insurance buyers understand: actual cash value versus replacement cost.

Here, we’ll explain the differences between these two options, and when you might need to use each one.

What is Actual Cash Value?

Let’s start with actual cash value, which seems like the more intuitive option of the two. As you might guess, actual cash value is often defined as the “fair market value” of the property you’re insuring. It’s not what you originally paid for the item.

So if you’re insuring a car, for instance, its actual cash value could be much lower than what you paid for it or even owe on it. (This is why gap insurance comes in so helpful with financed vehicles.) But on property that tends to appreciate–increase in value–the actual cash value could be more than you originally paid. This is more likely to happen with something like a home or an antique piece of furniture.

However, the International Risk Management Institute notes that actual cash value can be calculated differently depending on legislation and case history in your state. For instance, in California, a court ruling said that the term “actual cash value” means fair market value. So this is what you could have sold your home for under current market conditions, usually excluding the cost of the lot your home sits on.

How is Actual Cash Value Calculated?

With all that said, calculating actual cash value can get complicated. Value is subjective. However, insurers often use something called the broad evidence rule to measure actual cash value. This means insurers look at things like the home’s replacement costs, the age of the property, the profit you may have made from the property, and the property’s tax value.

Typically, if your insurance policy states that it will use “actual cash value” or “market value” in your policy, that’s what it means. However, some insurance policies define the limit as replacement costs minus depreciation. So that’s what it would take to rebuild your home, minus depreciation that would have occurred over time. Also, the value of the land your home sits on probably doesn’t count towards the calculation.

The key here is to figure out exactly how your insurance policy defines actual cash value, preferably before you choose that particular policy.

What is Replacement Cost?

What if your insurance policy calls for replacement costs? In this case, you’re insured for up to the amount that it would cost to completely rebuild a very similar home. Or, if you’re insuring personal property, replacement cost is what it would cost you to purchase the same item new.

Typically, an insurance company will write a replacement cost policy strictly. For instance, when you’re rebuilding your new kitchen, you don’t get to upgrade from laminate to granite countertops and have your insurance company eat the difference.

There are a couple of things to keep in mind with replacement cost calculations, particularly for homeowners insurance:

1. Market value vs. rebuilding value: Your home may cost more or less to rebuild from scratch than it would cost on the market. So this will be taken into account in the policy.
2. Cost of the land: Even if the worst should happen, you still wouldn’t have to re-buy the land your home sits on. This can mean replacement costs are significantly lower than cash value. Also, the builders may be able to reuse the home’s foundation, which also cuts down on costs.
3. Age of the home: Older homes can be more expensive to insure through replacement costs because it could get very expensive to replace that hand-milled woodwork and hardwood flooring. Keep this in mind if you have a historic home.

Either Option Comes with More Options

Many homeowners insurance policies include a cap. So you can insure your home for replacement costs up to a certain dollar limit. However, insurers often offer additional options to consider, including:

• Guaranteed Rebuild: This is like a replacement cost insurance policy, except without the cap. Whatever it costs to rebuild your home with similar materials and types of construction, the insurance company will pay in the event of a total loss. Since they could be more expensive for insurers, these policies are more expensive.
• Replacement Cost: With this traditional replacement cost option, you’ll work with your agent to basically guess your home’s replacement cost. If you’re wrong and it costs more to replace the home than your policy covers, you’re on the hook for the rest.
• Actual Cash Value: As noted above, some insurers differentiate this from market value, using instead its replacement costs less depreciation. But your insurance policy should define this.
• Market Value: This is what someone would pay for your home on today’s market. Again, you’ll typically work with your insurance agent to set a cap on this type of insurance.

So Which is Best for You?

As with most questions in personal finance, the answer is that it depends.

For the majority of homeowners, a replacement cost policy will be best. You want to know for sure that you could rebuild your home should the worst happen. With that said, if you have an older home, a replacement cost policy could get very expensive.

This type of policy simply won’t allow you to replace hand-carved oak paneling with cheap stuff from the hardware store, for instance. And you’d have to pay a lot more for labor to work with your higher-quality or old-fashioned materials, too.

So if you have an older home, you might opt for a market value policy, which will be more affordable. If your home burned down, you wouldn’t be able to replace it just like it is now. But you’d also not have to pay through the nose for insurance coverage.

On a personal note, my husband and I made that very decision a few years ago when we moved into our home, which was built in 1900. A replacement cost policy would have been well outside of our budget. So we opted for a cash value policy with a generous limit. If our home burned down, we’d probably just sell the lot and buy another home in our reasonably-affordable neighborhood.

That won’t be the right decision for everyone. And if you can afford it, a guaranteed rebuild type policy for an older home is great. But if it’s outside your budget, some coverage is always better than none.

You’ll also need to take into account your mortgage lender’s requirements. Lenders nearly always require that you carry homeowners insurance on a mortgaged property. But their specific requirements vary. You may find that lenders require the property to be insured for at least the amount of the mortgage. Your lender may be stricter, though. For instance, your lender could require that you get a replacement cost policy.

A Note About Personal Property Coverage

Actual cash value, market value, and replacement cost all apply to personal property insurance coverage, too. They apply to the personal property coverage that’s likely built into your homeowner’s policy, as well. And since a renters insurance policy is essentially a personal property policy, it applies here, too.

Again, the key is to know what your insurance company means, and then to decide which option is best for your needs.

Are you a low-budget college student who just needs basic renters insurance? An actual cash value policy could be super cheap. It doesn’t give you the ability to replace everything new if something happens. But at least you’d have some cash to shop garage sales and Craigslist to refurnish your home and get the basics.

If you can afford a replacement cost policy for your personal property, it could make your life much easier. Just think about things like your couch. So you have a leather couch you got secondhand for $1,000 on Craigslist?

If a tree falls through your roof and ruins the couch, do you really want to have to shop around forever to find a new-to-you one? Or do you just want to take $2,000 from the insurance company to buy a similar couch brand new?

When it comes down to it, most property insurance is pretty cheap. So it’s best to just spring for replacement cost coverage and be done with it. If your policy would be too expensive because of a specific item, like heirloom jewelry or artwork, consider adding a separate rider for those particular items.

Topics: Insurance

The post Actual Cash Value vs. Replacement Cost – Which Is Best for You? appeared first on The Dough Roller.

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Imagine you’re walking down an abandoned street with no-one in sight. Enjoying the beautiful and peaceful day, you spot a penny on the ground. Would you pick up the penny and put it in your pocket? What if that penny was a nickel, a dime, a quarter? Play this mental game all the way up to Ben Franklin’s smiling face on a $100 bill. At what point would you pick up the free money at your feet?

Now imagine the same scenario, but let’s morph the abandoned street into 5^th Avenue in Manhattan. I’m willing to bet your “pick up the money” threshold will be different in this scenario. This is because bending over to pick up some pocket change in private is one thing, but doing the same in public could be embarrassing.

But no matter when you decide to pick them up, do these actions count as being cheap or being frugal?

Frugality and cheapness have long gone hand and hand and the line that separates the two is unclear. You probably have a friend or family member who saves wrapping paper to reuse. Or maybe you know someone who saves the condiments and utensils from fast food restaurants to use at picnics. Do these people count as frugal or just plain cheap?

I suppose the answer depends on their financial situation, but even that might make the answer more complicated. A millionaire who saves wrapping paper is almost certainly cheap. But we’d probably classify a single mother of three working two jobs as frugal for taking the same actions. So perhaps the definition changes depending on circumstances.

It’s common for personal finance bloggers to define any action that saves a little money as frugality. But I don’t think that’s accurate.

Sure, spending 10 minutes online to find a coupon code for your next purchase makes sense. but should you spend all day finding the same coupon? That might cross the line into being cheap.

Why am I concerned about this? Because the ultimate goal of saving money isn’t to save as much as possible by whatever means possible. The goal of being wise with your money is to enjoy your life more. You can be frugal and enjoy life. But once you cross that line to cheapness, you start enjoying your life less and less. Then what’s the point?

When Does Frugality Turn Into Being Cheap?

When you have money budgeted but refuse to spend it – For the last six months, I’ve been squirreling away money. In September, during the Labor Day sales season, I plan to go shopping for a much-needed snowblower.  Every winter, I spend 6-8 hours shoveling snow every single time it snows six inches or more. Beyond the time wasted, it’s backbreaking work. Every year, I promise myself I’m getting a snowblower. Then November rolls around and I say “Ahhh, I’ll save the money and just shovel it.” Mistake.

My livelihood (and health) are much more important than the $800 or so I stand to save by not buying a snowblower. After bending over and picking up that heavy snow a thousand times, my back does me no favors. Admittedly, I’ve been cheap trying to avoid this much-needed purchase. So this year, I’m sticking to my guns and buying a good snowblower.

Using your valuable time to save pennies on the dollar – Back to the snowblower example. In 2013 and 2014, the winters in Connecticut were bad. Very bad. One snowstorm actually dropped 38 inches on our house, and we were literally snowed in for a week. In totality, it took me two eight hour days to be able to dig a simple path from our house to civilization. It took me another three hours to clear the driveway well enough to get a car out. That single storm alone set me back 40 man hours. Had I owned a quality snowblower, I probably could have done the job in half that.

I lost 20 hours of my life that I could have spent doing something else. Not smart considering I can make good money working. Or I could have just spend time relaxing and spending quality time with my family. Divide the cost of a snowblower by the time I could have saved in those two years, and my hard-won time was worth about three bucks an hour.

Sacrificing quality – In my opinion, this is the most detrimental decision people make when debating frugality versus cheapness. When you own products that are not working properly, are unsafe, are a health hazard etc. and and are necessities, life can get dangerous. A car that leaks oil, a toilet that leaks water… These are just a few examples of things that you can let go by and rationalize, saying, “I don’t need to fix that right now.”

Often times, these kinds of fixes will only lead to bigger, more expensive fixes. So the justification may be to let them slide, but that would be unwise. If you can find a way to save and pay for these expenses, do it. Spending a little bit early on the products and dwellings you depend on goes a long way towards saving big money later on.

Are You Frugal?

The bottom line is that for me, frugality is the act of saving money when money I have to spend some money or significant time. Shopping online using rebates or coupon codes is a perfect example, as is buying the grocery items on sale. You cross the line of frugality when your opportunity cost or future cost outweighs any gains you might save.

Take a few minutes before any purchase and think about how you might be able to save money without sacrificing time or quality. Online coupons, using a cash back credit card, or waiting for discounted prices is a great place to start.

Topics: Smart Spending

The post When Does Frugality Turn Into Cheapness? appeared first on The Dough Roller.

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Posted by: John S Kiernan

Consumer research and ratings firm J.D. Power has released its August auto sales forecast, and the trends aren’t looking spectacular for the industry: Sales will continue to fall, and vehicles will sit longer on dealers’ lots than at any time since July 2009, despite big discounts for buyers. And with dealers offering even bigger savings during Labor Day weekend, especially on older models, potential buyers will certainly be asking: Is now a good time to purchase a car?

At the moment, the market appears to be tilting in favor of the consumer. But it’s worth looking more deeply at the specs. Should buyers apply for financing from banks, credit unions or manufacturers? Which manufacturers offer the best financing and leasing terms? How do interest rates compare for new versus used vehicles?

WalletHub’s analysts answer these questions and more below, based on a detailed analysis of financing offers from a diverse group of more than 150 lenders. The data provided in this report, along with our panel discussion featuring industry experts, will help you make an informed decision. Read on for our findings.

1. Key Findings
2. Who Offers the Best Rates?
3. Rates Over Time
4. Excellent vs. Fair Credit Score
5. Manufacturer Transparency
6. Debt Levels Over Time
7. Ask the Experts
8. Methodology
9. Historical Data

Key Findings

• Interest rates for new cars are at their lowest point in the past three years. However, the average new-car loan now charges 16 percent less interest than the average used-car loan.
• Now is the time for people with excellent credit to buy used cars. The average interest rate for such buyers has fallen nearly 25 percent since Q3 2014.
• Overall, buyers who have fair credit will end up spending about five times more to finance a vehicle than someone with excellent credit, which equates to $6,282 in additional interest payments over the life of a $20,000, five-year loan.
• Consumers in the market for a new car should start their search for financing with car manufacturers (rates 44 percent below average) and credit unions (21 percent below average). National banks (10 percent above average) and regional banks (25 percent above average) should be secondary options.
• Car manufacturers continue to lack transparency when it comes to leasing offers, with the average one receiving a WalletHub Transparency Score of 4.5 out of 10. The most transparent manufacturers currently include Infiniti, Mini, BMW, Mercedes, Honda, Volkswagen, Kia, Toyota, Nissan and Hyundai, but even they registered only a 6-point rating.
• Toyota, Volkswagen, Hyundai, Kia, Mazda, Ford and Cadillac offer the lowest financing rates among the major car manufacturers surveyed by WalletHub. Kia, Jaguar, Ford, Infiniti, Acura, Hyundai and Toyota have the best leasing offers.

Who Offers the Best Rates?

   Note: Above data is based on a 36-month term.  

Financing Offers by Car Manufacturer

It is important for consumers to understand that car-dealership financing offers may originate from the financing arm of a car manufacturer or from a third-party financial institution. The following offers reflect financing available directly from car manufacturers’ financing arms.

Car Manufacturer	Financing APR Q3 2017	Lease APR (inferred interest rate) Q3 2017
Honda	0.90%	4.76%
Toyota	0.00%	3.97%
Volkswagen	0.00%	4.87%
Chevrolet	2.99%	6.28%
BMW	3.29%	4.74%
Nissan	3.99%	5.61%
Hyundai	0.00%	2.93%
Kia	0.00%	2.34%
Mazda	0.00%	4.96%
Acura	0.90%	2.86%
Ford	0.00%	2.58%
Audi	3.99%	4.58%
Infiniti	1.90%	2.75%
Mini	2.90%	7.95%
Lexus	2.99%	4.97%
Mercedes	4.90%	5.46%
Jaguar	1.90%	2.35%
Cadillac	0.00%	4.37%
Volvo	2.49%	5.20%
Average	1.74%	4.40%

Note: Above data are based on a 36-month term. The APRs presented for the financing and lease programs of the car manufactures are informational only. The actual obtainable values are based on various factors, including the borrower’s creditworthiness, income, location of residence, promotional programs and even negotiation skills. Make sure to always check upfront with a dealer about the availability of any discounts for particular groups (e.g., military personnel with USAA membership) that you might qualify for and any other costs/restrictions that may be imposed, especially in the case of lease contracts.

Rates Over Time

Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/10131/auto-linechart1.html" width="780" height="450" frameBorder="0" scrolling="no"></iframe> <div style="width:780px;font-size:12px;color:#888;">Source: <a href="http://ift.tt/2lPFOQX;Note: Above data is based on a 36-month term.

Excellent vs Fair Credit Score

    Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/10131/auto-columnchart2.html" width="780" height="450" frameBorder="0" scrolling="no"></iframe> <div style="width:780px;font-size:12px;color:#888;">Source: <a href="http://ift.tt/2lPFOQX;    Note: Above data reflects a $20,000 five-year loan for a new car with a fixed interest rate, using WalletHub’s interest rate data from Q3 2017.

Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/10131/auto-linechart2.html" width="780" height="450" frameBorder="0" scrolling="no"></iframe> <div style="width:780px;font-size:12px;color:#888;">Source: <a href="http://ift.tt/2lPFOQX;

Manufacturer Transparency

Leasing offers are the most difficult type of car-purchasing arrangement for consumers to understand, as they lack the equivalent of an APR that can be used for comparison. As a result, the transparency of manufacturers about these deals is integral to a consumer’s ability to make an informed decision.

Manufacturer	Transp. Score Q3 2017		Manufacturer	Transp. Score Q3 2017
Infiniti	6		Acura	5
Mini	6		Subaru	5
BMW	6		Ford	3
Mercedes	6		Dodge	3
Honda	6		Audi	3
Volkswagen	6		Volvo	3
Kia	6		Lexus	3
Toyota	6		Chrysler	3
Nissan	6		Buick	2
Hyundai	6		Cadillac	2
Mazda	5		Chevrolet	2

Debt Levels Over Time

Source: Federal Reserve Bank of New York Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/10131/auto-linechart5.html" width="780" height="450" frameBorder="0" scrolling="no"></iframe> <div style="width:780px;font-size:12px;color:#888;">Source: <a href="http://ift.tt/2lPFOQX;

Source: Federal Reserve Bank of New York Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/10131/auto-linechart6.html" width="780" height="450" frameBorder="0" scrolling="no"></iframe> <div style="width:780px;font-size:12px;color:#888;">Source: <a href="http://ift.tt/2lPFOQX;

Source: Federal Reserve Bank of St. Louis Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/10131/auto-linechart7.html" width="780" height="450" frameBorder="0" scrolling="no"></iframe> <div style="width:780px;font-size:12px;color:#888;">Source: <a href="http://ift.tt/2lPFOQX;

Source: Federal Reserve Bank of St. Louis Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/10131/auto-linechart8.html" width="780" height="450" frameBorder="0" scrolling="no"></iframe> <div style="width:780px;font-size:12px;color:#888;">Source: <a href="http://ift.tt/2lPFOQX;

Ask the Experts

If you aren’t carefully monitoring the trends in car sales, you might price yourself out of a good deal — or buy at the wrong time. For additional insight into the car-buying process and related issues, we asked a panel of experts to weigh in with their thoughts on the following key questions:

1. On a scale of 1 (an emphatic no) to 10 (an emphatic yes), is this a good time of year to buy a car?
2. Do you expect auto financing deals to improve/get worse/stay the same over the next 12 months?
3. What steps can buyers and dealers take to make the car buying process more transparent and hassle-free?
4. What tips do you have for individuals with fair or poor credit who are looking for an auto loan?
5. What are some signs that you may be getting ripped off in the auto-financing process?

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• Qingjiu (Tom) Tao Assistant Professor at James Madison University
• Nonna Y. Sorokina Assistant Professor of Finance in the Department of Finance at The College of New Jersey
• Lucy Ackert Professor of Economics, Finance, & Quantitative Analysis in the Coles College of Business at the Kennesaw State University
• Janell D. Townsend Associate Professor of Marketing and International Business at Oakland University
• James Farrell Associate Professor of Finance and Economics at Florida Southern College
• Dick Canada Senior Lecturer of Marketing and Founder & Faculty at the Center for Global Sales Leadership in the Kelley School of Business at Indiana University
• Dennis F. Galletta Professor of Business Administration, Ben L. Fryrear Faculty Fellow and Director of the Katz Doctoral Program in the Katz Graduate School of Business at University of Pittsburgh
• Claudiu Dimofte Associate Professor of Marketing in the Fowler College of Business at San Diego State University
• Nelson Amaral Assistant Professor of Marketing in the Kogod School of Business at American University

Qingjiu (Tom) Tao Assistant Professor at James Madison University On a scale of 1 (an emphatic no) to 10 (an emphatic yes), is this a good time of year to buy a car? This is not a good time of year to buy a car, spring is typically hard to get good deals. It will be 1. Do you expect auto financing deals to improve/get worse/stay the same over the next 12 months? Given the trend of rate hike from Fed, I expect the rate will go up/financing deals will get worse over the next 12 months. What steps can buyers and dealers take to make the car buying process more transparent and hassle free? Buyers will have to rely on third party information providers like truecar.com to make the car buying process more transparent and hassle free. Dealers rely on the information asymmetry to earn more money, they do not have the incentive to increase transparency. Nonna Y. Sorokina Assistant Professor of Finance in the Department of Finance at The College of New Jersey What are the most common mistakes people make when shopping for a car? The most common mistake is an assumption that buying a used car vs a new car always saves money. People often underestimate the cost of maintenance and repairs, which is a non-issue for a new car on warranty. The difference in the interest rates of new and used car loans is also a big factor. In what circumstances is leasing a smarter option than buying? When one can fit into a lowest mileage option (such as 10K miles a year). Although, a smart approach is always to grab a calculator and compare. Generally, what percentage of take home pay should go to car payments? Car payment shall not be considered in isolation. A "safe" ratio of total payments on all debt to gross income is about 35% or less. However, some lenders think that for a borrower with a good credit the ratio may safely reach up to 50%. Lucy Ackert Professor of Economics, Finance, & Quantitative Analysis in the Coles College of Business at the Kennesaw State University What are the most common mistakes people make when shopping for a car? I strongly recommend taking some time, upfront, to investigate the car desired. The Internet makes the process easy and efficient. A common mistake, particularly for younger buyers, is impatience. In all likelihood, the car will still be there tomorrow. There is no need to rush into a deal that is later regretted. Don't buy on impulse! I also recommend that buyers check out on-line dealers like Carvana and True Car. I was very glad I did the last time I bought a car. As a woman, I am leery of being taken advantage of by a salesperson. I also do not enjoy haggling over the price. The upfront pricing gave me more confidence that I was getting a fair price. In what circumstances is leasing a smarter option than buying? It is in a buyer's long-run interest to hold a car as long as possible. In such case, buying is better than leasing because the finance charges are typically lower. With that said, there are people who simply enjoy a nice, new car. While I do not recommend turning over cars quickly, I know that some people are willing to spend money for the experience. For those who are compelled to change cars often, leasing can be the better option. Depending on the terms of the contract, the monthly payment and down payment can be attractive. Beware, though, of penalties for ending the lease early or going over the contracted mileage. Generally, what percentage of take home pay should go to car payments? Car payments should take a maximum of 10% of take home pay. The average person has a lot to cover and must not forget to have a safety net of 3-6 months saved in case of a possible interruption in employment. With a mortgage payment of a maximum of 25% of take home pay, it would not be wise to spend too much on a car. These days people need to save for retirement and, if they have children, for college expenses. Plus, many are still paying off their own college loans. Janell D. Townsend Associate Professor of Marketing and International Business at Oakland University On a scale of 1 (an emphatic no) to 10 (an emphatic yes), is this a good time of year to buy a car? 8 – Winter can be a great time to buy cars, as traffic tends to be lower in all retail environments when the weather is bad. Do you expect auto financing deals to improve/get worse/stay the same over the next 12 months? Interest rates are heading up, and we should expect to see increases in payments for both new and used cars over the next 12 months. What steps can buyers and dealers take to make the car buying process more transparent and hassle free? Buyers can utilize the vast array of online tools now available to consumers to search for the best interest rates, and the best prices. One strategy is to find the invoice price the dealer is paying to the manufacturer to calculate what the possible markup is for the price being offered. This gives the consumer a basis for negotiation. Also, there are websites where the current incentives being offered by manufacturers to dealers can be found; these incentives can often be passed through to consumers. What tips do you have for individuals with fair or poor credit who are looking for an auto loan? Be careful to compare rates. Always check with credit unions first, because they tend to have the best rates. What are some signs that you may be getting ripped off in the auto financing process? Lower Interest rates are often offered in lieu of rebates. It is important to check the difference in the true value between lower interest rate and a rebate. James Farrell Associate Professor of Finance and Economics at Florida Southern College What are the most common mistakes people make when shopping for a car? One of the most common mistakes people make when shopping for a car is not getting pre-approved for financing from an outside lender. There are many potential sources of car loans and having a competitive rate walking into the dealership can greatly simplify the backend of the buying process. It is also beneficial to have a written offer for your trade-in from an outside party as well, for the same reason. In what circumstances is leasing a smarter option than buying? Leasing may be a better option than buying under many circumstances. One of the biggest factors is manufacturer/dealer motivation. There are times when lease deals are out of line with purchase deals. This can originate in the pricing after incentives, or the residual value built into the deal or a cut-rate interest rate. Additionally, if you are the type of driver that will want a new vehicle every 3 or 4 years, it very well be in your best interest to lease as it enables you to lock in your effective trade-in price the day you buy the car. Many potential buyers fear getting hit with mileage and condition charges when they turn in their lease, but purchasers face the same issues. Generally, what percentage of take home pay should go to car payments? Conventional theories say you should limit your car expenses, inclusive of car insurance, to roughly 15% of your take home pay. I would deviate from this a bit. I would argue that there should be a lower initial level, say 12% of your take home pay, but allow for individuals to add to that based on their preferences. If I was helping an individual with their budget, I would allocate a percentage to luxury or lifestyle expenses. This budget would then be reallocated based on what that individual enjoys in life. Some people would want a larger portion to go towards their home, others may want a larger travel budget, and some may want it to go towards their car. Dick Canada Senior Lecturer of Marketing and Founder & Faculty at the Center for Global Sales Leadership in the Kelley School of Business at Indiana University What are the most common mistakes people make when shopping for a car? Perhaps the most common mistake that can be costly is that they negotiate through the salesperson rather than calling the GM directly and explaining to the GM that here is the color, model and accessories I want on my car and that I would like my car payments to be "X" for a "Y" period of time. (This assumes, of course, that the buyer has done their pricing homework). Another mistake is purchasing a car vs leasing a car and discovering after 12 to 24 months after purchase that you do not like the car because of unforeseen minor repairs and even grown old of the particular color, either external or internal. (Personally, I don't believe a person really can become that familiar with a car's indiscrepancies by test driving it for 5 miles.) In what circumstances is leasing a smarter option than buying? It seems to me that the advantages of leasing are two-fold: 1) Leasing permits you to drive a more expensive automobile in terms of monthly car payments (read cash flow) than if you purchased the automobile. 2) Leasing permits you to conveniently change cars every three years. However, the downside to both of these reasons that favor leasing is the money it costs the buyer in the long term compared to purchasing. For example, you lease a car for 36 months and pay $400 per month; you will have paid $14,400 over the 36 months without any money being returned to you when you trade it in for another leased auto. Not the case if you purchase the car, your $14,400 would be used for a trade-in or at least you would have an investment or an asset. Generally, what percentage of take home pay should go to car payments? If an automobile is your second largest purchase in your lifetime next to your home, one would think as a general rule  yes, there are exceptions if you value a car more than a home or vacations  the car payment should not exceed more than 10% of your gross income. For example, if your gross income is $40,000 per year, your car payments should not exceed $4,000 per year or $333.33 per month. Dennis F. Galletta Professor of Business Administration, Ben L. Fryrear Faculty Fellow and Director of the Katz Doctoral Program in the Katz Graduate School of Business at University of Pittsburgh What are the most common mistakes people make when shopping for a car? I believe they do the following:

• Get emotionally involved with a particular car on the lot;

• Lock into one particular color;

• Express emotions to the car salesperson;

• Fail to do research;

• Only get one quote. (Note: In the last 4 car purchases with trade-in, 3 times I saved about $4,000 each. The other time we had to tow in the trade-in, but after the engine was disassembled, we faced a $2500 bill to reassemble without repairing it, and we therefore didn't have that opportunity. We tried to negotiate but they didn't budge at all. We were trapped.)

In what circumstances is leasing a smarter option than buying?

• Low mileage driving

• Used for business

Generally, what percentage of take home pay should go to car payments? I think this depends on the priority of a car for a person, their family size and situation, and the cost of housing/living. This is difficult to answer for everyone so I'm not comfortable weighing in on that. I think the disposable income would be more important to consider. For instance, holding constant the cost of living:

• $3,000 net pay per month but $1,500 house payment: It would be hard to pay more than a hundred or two a month.

• $3,000 net pay per month but $500 house payment: I would try to keep it at about $500.

• $6,000 net pay per month with $1,500 house payment: I think $750 to $1,000 would work.

Also, if there is excellent public transportation (for example, Washington DC, New York City, or Boston, MA), I'd say to only have one car for two people. Claudiu Dimofte Associate Professor of Marketing in the Fowler College of Business at San Diego State University On a scale of 1 (an emphatic no) to 10 (an emphatic yes), is this a good time of year to buy a car? I would say 3. In general, if the main concern is getting a good price, this may not be the best time to pull the trigger in terms of a new car purchase. That is because some of the critical considerations for car dealers include reaching sales targets and unloading previous model year vehicles before the new models are introduced. On each of these dimensions, early months are not placing quite as much pressure on dealers to close deals, and therefore buyers’ ability to haggle may be more limited. However, the specifics of each year’s economic environment should also be taken into account. For example, the expectation that interest rates may rise during the upcoming months could be a strong incentive to make the move sooner rather than later. Do you expect auto financing deals to improve/get worse/stay the same over the next 12 months? It is difficult to make accurate predictions in today’s economic environment. Given that interest rates seem to be on the way up and that the current administration’s stated policies will likely cut taxes and hurt imports, there is a good chance auto financing deals will get worse in the next 12 months. What steps can buyers and dealers take to make the car buying process more transparent and hassle free? It is not apparent that dealers have a strong incentive to really make the car buying process more transparent. In fact, much of their profits come precisely from the opaque nature of the buying process, which employs large amounts of industry-specific jargon and financial wizardry that the average buyer is unable to comprehend. Consumers, on the other hand, often feel confident about their negotiating skills and assume that puts them in a position to grab great deals (such as purchasing at or below MSRP). That is akin to playing a lottery that, more often than not, they lose. The solution to the transparency problem (or, in academic terms, the asymmetric information advantage that dealers have over buyers) may be to agree on a set of standardized financial metrics that must be disclosed about each vehicle purchase contract in a manner that makes the transaction’s financial implications clear even for someone who is otherwise illiterate on the topic. This type of consumer protection was introduced in the financial products industry by the Credit Card Accountability Responsibility and Disclosure Act of 2009, with positive results for the average consumer. However, given the current administration's stated economic goals, the chance of having similar protections introduced in the car industry is virtually zero. With that in mind, it seems the only way for the process to be more transparent is for the buyers to make it so, by educating themselves  at least to some extent  in the specific financial aspects associated with a car purchase transaction. What are some signs that you may be getting ripped off in the auto financing process? Some of the classic signs have to do with burying relevant financial details within complex contracts that are difficult to understand, compounded by an unwillingness or inability to provide clear answers to questions such as “what is the total cost of this vehicle?” or “what are the exact fees being charged?” Another sign is framing the discussion in terms of “monthly payments that you can afford,” which is misleading since that number can be made to look appealing while changing other numbers such as the length of the contract and thus your total vehicle cost. Nelson Amaral Assistant Professor of Marketing in the Kogod School of Business at American University What are the most common mistakes people make when shopping for a car? Nowadays, cars often run for 200,000 miles -- not 100,000 like they did 10 years ago. This is great news but it also means that buying a car can be a longer-term commitment than it used to be. As a result, people should:

1. Take their time -- a big commitment and a long-term commitment deserves not to be rushed! Also, there’s so much information on the internet; people need to use that resource to learn as much as they can before they approach any dealers.

2. Use their heads -- purchasing an automobile is already a very emotional experience. But, there’s a lot of money on the line and as I mentioned above it’s a long-term commitment. Be rational and don’t make any decisions on the spot. When you think you found the car you love, go home and cool off for a day before you make the decision. Also, go in knowing that the base model that’s advertised is usually very unattractive. You’ll need to budget 10 to 20% more than the advertised price to get a car that has the features you probably want. Finally, make sure that you test drive the car for as long as you need to get a good feel for it. Try to include highway driving because some cars act very differently at high speeds.

3. Be smart with your money -- shop around for financing. There’s no reason to rely heavily on the dealership for your loan. It’s the easiest thing to do, but not always the best. Also, if you have a used car the easy route is to trade in. Rely on the advice provided above and don’t do the easy thing -- sell your car yourself. You can make the several thousands of dollars that the dealership needs to make instead of letting the dealership keep that money for themselves. Finally, research shows that people underweight sacrifices in the distant future. For car buyers this means that they focus too much on the monthly payment and not on the final price that will be paid over the term of the loan. Focus on the final price, not the monthly payments.

In what circumstances is leasing a smarter option than buying? Generally speaking, leasing is a bad idea. There are only a few conditions under which makes sense. For example, if you run your own business you can deduct lease payments from your income, which can reduce your tax burden. Also, if you love luxury cars they tend to have higher resale values which allows dealerships to charge incredibly low lease rates. Finally, if you only need a car for a couple of years because you are in a temporary or contract position, or in a location where you need a car but don’t plan on staying there for more than two or three years, then a lease might make sense. Generally, what percentage of take home pay should go to car payments? A rule of thumb that most financial advisors suggest is to put down 20% and use no more than 10% of your gross income for monthly expenses.

Methodology

To conduct our analysis, we reviewed auto-financing offers from a sample of 155 lenders, including 27 “Community Banks” (<$1 billion in total deposit volume) and “Small Banks” ($1 billion to $10 billion in total deposit volume), 47 “Regional Banks” ($10 billion to $100 billion in total deposit volume), 10 “National Banks” (those with a national presence), 52 “Credit Unions” and 19 “Car Manufacturers.”

For comparison purposes, we used 36 months as the repayment term for both financing and lease programs.

For bank-originated loans, we applied the following assumptions:

• $20,000 Loan: New Cars
• $10,000 Loan: Used Cars
• 80 Percent Loan-to-Value Ratio
• Excellent Credit Score: 720+

In order to calculate the “Lease APR,” we used the following methodology:

• We calculated the difference between the price of the car at the beginning and end of the lease to represent the amount that someone “borrows” when he or she leases a car.
• We then multiplied the monthly payments with the term of the lease to obtain the total amount paid for that contract.
• Finally, we calculated the difference between the total amount of payments on the lease contract and the amount “borrowed” to represent the total amount of interest, in dollars, that was paid during that period.

We obtained car-manufacturer loan and lease data from manufacturer websites, where available, or contacted the manufacturer directly. We also applied the following assumptions:

• Excellent Credit Score: 720+
• Annual Expected Mileage for the Lease Program: 15,000

For each car manufacturer, we requested APR data from an AutoNews study published quarterly for the most popular model with the most basic equipment options available.

For the price of the car, we used the “Manufacturer’s Suggested Retail Price” (MSRP), minus any applicable dealer discount. Our sample of cars includes the following:

Car Manufacturer	Car Model Q3 2017	Price of the Car
	2017 Honda Accord Sedan LX	$20,130
	2017 Toyota Camry SE FWD	$23,200
	2017 Volkswagen Jetta Sedan SE Automatic	$18,270
	2017 Chevrolet Cruze Sedan LT Automatic	$21,500
	2017 BMW 3 Series - 320i Sedan	$36,350
	2017 Nissan Altima 2.5 S	$20,740
	2017 Hyundai Elantra SE Automatic	$18,435
	2018 Kia Optima LX	$23,585
	2017 Mazda3 Sport 4D Sedan	$16,820
	2017 Acura ILX	$22,605
	2017 Ford Fusion SE FWD	$20,745
	2017 Audi A4 2.0 Manual Quattro	$47,000
	2017 Infiniti Q50 3.0	$35,000
	2017 Mini Cooper Hardtop	$21,110
	2017 Lexus ES 350	$33,875
	2017 Mercedes-Benz E300	$51,445
	2017 Jaguar XF 2.0D	$47,964
	2017 Cadillac ATS Sedan	$33,560
	2017 Volvo S60	$32,875

Car Manufacturer & Dealer TransparencyHow easy is the process of obtaining complete financing and lease information from car manufacturers and dealers? – Worth 10 Points Total

1. When lease information is provided on the manufacturer/dealer’s website, how complete is the info? – Worth 5 Points Total
   • Monthly Payment + Lease Term – 0 points
   • Car Price – 1 point
   • Down Payment – 1 point
   • Residual Value – 3 points
2. Does the manufacturer/dealer provide complete lease info on its website for any car combo a consumer may choose? – Worth 1 Point Total
   • Yes - 1 point
   • No - 0 points
3. How prevalent is the lease information provided on the manufacturer/dealer’s website? – Worth 2 Points Total
   • Complete info not provided – 0 points
   • Complete info provided but in fine print or hard to find – 1 point
   • Complete info provided and prevalent – 2 points
4. Does the manufacturer/dealer provide complete lease info offline? - Worth 2 Points Total
   • Both car manufacturers and dealers willing to provide complete info – 2 points
   • Only car manufacturers willing to provide complete info – 1 point
   • Only car dealers willing to provide complete info – 1 point
   • Neither car manufacturers nor dealers willing to provide complete info – 0 points

 

Historical Data Car Loan APRs 2013-2017

	Q2 2017 (vs. last yr)	Q1 2017 (vs. last yr)	Q4 2016 (vs. last yr)	Q3 2016 (vs. last yr)	Q2 2016 (vs. last yr)	Q1 2016 (vs. last yr)	Q4 2015 (vs. last yr)	Q3 2015 (vs. last yr)	Q2 2015 (vs. last yr)	Q1 2015 (vs. last yr)	Q4 2014 (vs. last yr)	Q3 2014 (vs. last yr)	Q2 2014 (vs. last yr)	Q1 2014 (vs. last yr)	Q4 2013 (vs. last yr)
National and Regional Banks - New Cars	3.88% (-0.62%)	3.83% (-7.66%)	3.82% (-6.30%)	3.81% (-11.36%)	3.90% (-8.91%)	4.15% (-3.20%)	4.08% (-5.25%)	4.29% (-0.76%)	4.28% (-1.45%)	4.29% (-2.44%)	4.31% (-3.20%)	4.33% (-2.55%)	4.34% (-3.74%)	4.39% (-5.26%)	4.45% (-7.87%)
National and Regional Banks - Used Cars	4.58% (0.81%)	4.53% (-4.27%)	4.53% (-5.79%)	4.50% (-10.84%)	4.54% (-8.76%)	4.73% (-4.73%)	4.81% (-6.14%)	5.05% (1.47%)	4.98% (-0.98%)	4.96% (-1.30%)	5.12% (-1.16%)	4.98% (-2.04%)	5.02% (-2.84%)	5.03% (-4.65%)	5.18% (-5.90%)
Credit Unions – New Cars	2.41% (9.18%)	2.30% (4.56%)	2.17% (0.29%)	2.20% (1.06%)	2.21% (-7.43%)	2.20% (-8.62%)	2.16% (-11.40%)	2.18% (-11.97%)	2.39% (-3.58%)	2.41% (-4.24%)	2.44% (9.25%)	2.47% (N/A)	2.48% (N/A)	2.51% (N/A)	2.24% (N/A)
Credit Union – Used Cars	2.68% (7.55%)	2.59% (3.74%)	2.45% (-0.42%)	2.46% (0.32%)	2.49% (-6.32%)	2.49% (-6.96%)	2.46% (-15.79%)	2.45% (-16.85%)	2.66% (-10.38%)	2.68% (-9.94%)	2.93% (15.35%)	2.95% (N/A)	2.96% (N/A)	2.98% (N/A)	2.54% (N/A)
Community and Small Banks – New Cars	4.14% (-2.02%)	4.21% (-3.24%)	4.21% (1.96%)	4.20% (-3.17%)	4.22% (13.82%)	4.35% (14.42%)	4.13% (4.41%)	4.34% (9.64%)	3.71% (-7.27%)	3.80% (-4.82%)	3.96% (-12.14%)	3.96% (N/A)	4.00% (N/A)	4.00% (N/A)	4.50% (N/A)
Community and Small Banks – Used Cars	5.18% (-3.45%)	5.23% (-1.86%)	5.23% (1.17%)	5.36% (1.19%)	5.36% (17.93%)	5.33% (18.18%)	5.17% (5.61%)	5.30% (8.71%)	4.55% (-7.48%)	4.51% (-6.86%)	4.90% (-2.21%)	4.88% (N/A)	4.92% (N/A)	4.84% (N/A)	5.01% (N/A)
Car Manufacturers – New Car Financing	2.01% (4.15%)	1.77% (-19.18%)	1.14% (-42.71%)	1.45% (19.83%)	1.93% (21.87%)	2.19% (4.78%)	1.99% (N/A)	1.21% (N/A)	1.58% (N/A)	2.09% (N/A)	1.92% (-21.89%)	N/A (N/A)	N/A (N/A)	N/A (N/A)	2.46% (N/A)
Car Manufacturers – Leasing	5.54% (12.15%)	4.38% (-1.13%)	4.58% (-3.78%)	4.58% (-8.40%)	4.94% (0.43%)	4.43% (-10.14%)	4.76% (N/A)	5.00% (N/A)	4.92% (N/A)	4.93% (N/A)	5.73% (31.84%)	N/A (N/A)	N/A (N/A)	N/A (N/A)	4.35% (N/A)

Note: Above data is based on a 36-month term.

Historical Financing Offers by Car Manufacturer

Car Manufacturer	Financing APR Q2 2017	Lease APR (inferred interest rate) Q2 2017	Financing APR Q1 2017	Lease APR (inferred interest rate) Q1 2017	Financing APR Q4 2016	Lease APR (inferred interest rate) Q4 2016	Financing APR Q3 2016	Lease APR (inferred interest rate) Q3 2016	Financing APR Q2 2016	Lease APR (inferred interest rate) Q2 2016	Financing APR Q1 2016	Lease APR (inferred interest rate) Q1 2016	Financing APR Q4 2015	Lease APR (inferred interest rate) Q4 2015	Financing APR Q3 2015	Lease APR (inferred interest rate) Q3 2015	Financing APR Q2 2015	Lease APR (inferred interest rate) Q2 2015	Financing APR Q1 2015	Lease APR (inferred interest rate) Q1 2015	Financing APR Q4 2014	Lease APR (inferred interest rate) Q4 2014	Financing APR Q4 2013	Lease APR (inferred interest rate) Q4 2013
Nissan	N/A	N/A	2.81%	4.54%	N/A	N/A	0.00%	2.54%	0.00%	5.09%	0.90%	4.53%	2.99%	4.18%	0.00%	3.06%	0.00%	4.57%	0.00%	0.94%	0.00%	4.74%	0.00%	2.04%
Toyota	0.00%	3.45%	0.00%	3.30%	0.00%	4.10%	0.00%	2.97%	0.00%	2.35%	2.99%	1.94%	0.00%	5.78%	0.00%	3.29%	0.00%	2.87%	0.00%	4.39%	1.90%	5.66%	3.38%	4.42%
Mazda	N/A	N/A	0.00%	2.31%	0.00%	4.84%	2.69%	4.86%	0.00%	6.19%	1.99%	5.76%	3.99%	5.15%	0.90%	2.86%	3.99%	9.21%	2.24%	5.75%	0.90%	6.36%	0.90%	3.23%
Honda	0.90%	6.19%	0.90%	2.66%	0.90%	3.89%	1.99%	3.13%	0.90%	3.56%	0.90%	6.40%	0.90%	2.83%	0.90%	3.36%	0.90%	4.77%	0.90%	5.67%	0.90%	3.67%	0.90%	6.25%
Chrysler	N/A	N/A	0.00%	2.27%	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	0.90%	3.41%	1.90%	9.15%	0.00%	4.55%	1.98%	8.28%	3.64%	4.80%
Lexus	N/A	N/A	1.90%	4.18%	N/A	N/A	0.90%	5.85%	1.90%	4.05%	2.90%	5.26%	2.90%	3.92%	0.90%	3.68%	N/A	N/A	N/A	N/A	N/A	N/A	2.90%	2.17%
Volvo	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	1.99%	2.70%	N/A	N/A	2.69%	1.94%	1.69%	2.65%	1.90%	2.57%	1.90%	7.23%	N/A	N/A
Kia	N/A	N/A	0.00%	5.21%	0.00%	5.39%	2.00%	3.65%	1.90%	6.99%	2.99%	2.70%	N/A	N/A	0.00%	4.83%	0.00%	7.54%	1.90%	4.36%	0.00%	5.27%	0.90%	6.01%
Ford	3.50%	3.46%	0.00%	5.81%	0.00%	6.47%	0.00%	3.10%	0.00%	3.44%	2.90%	5.00%	N/A	N/A	0.00%	5.02%	0.00%	2.81%	5.90%	6.95%	3.94%	4.71%	4.90%	2.38%
BMW	3.59%	5.03%	2.91%	5.14%	2.99%	5.18%	0.90%	3.16%	2.97%	3.72%	2.92%	4.97%	2.92%	5.98%	0.90%	4.42%	0.90%	3.35%	3.12%	6.67%	3.12%	2.26%	2.99%	4.67%
Volkswagen	N/A	N/A	2.90%	3.66%	2.90%	3.52%	1.99%	3.59%	1.90%	3.34%	2.90%	3.23%	1.90%	5.02%	0.00%	5.42%	0.00%	3.89%	2.90%	3.97%	2.90%	5.68%	3.90%	2.51%
Infiniti	0.90%	5.62%	2.99%	5.72%	2.99%	4.69%	0.99%	4.23%	1.90%	3.62%	1.90%	4.81%	N/A	N/A	1.99%	3.84%	1.90%	4.14%	2.90%	2.87%	2.49%	4.68%	2.99%	5.64%
Audi	3.40%	4.87%	2.90%	4.08%	N/A	N/A	1.99%	4.11%	2.90%	6.94%	3.90%	5.83%	2.90%	3.88%	2.90%	3.34%	2.90%	2.73%	2.29%	5.23%	2.90%	6.41%	1.90%	4.34%
Chevrolet	N/A	N/A	3.99%	2.66%	N/A	N/A	2.90%	4.68%	2.90%	2.71%	1.99%	1.91%	1.99%	6.97%	1.99%	5.03%	2.99%	5.28%	2.90%	3.27%	1.90%	1.32%	2.90%	1.15%
Subaru	N/A	N/A	0.00%	3.55%	0.00%	7.30%	0.00%	6.76%	1.49%	8.35%	1.49%	6.59%	1.49%	3.92%	1.90%	5.23%	1.49%	3.81%	1.49%	4.37%	2.99%	8.01%	0.00%	2.50%
Buick	N/A	N/A	5.90%	4.43%	N/A	N/A	N/A	N/A	1.99%	5.02%	2.90%	3.88%	N/A	N/A	0.00%	7.26%	N/A	N/A	N/A	N/A	1.85%	4.13%	1.90%	3.49%
Mercedes	2.99%	6.29%	3.99%	7.21%	1.99%	3.01%	2.99%	4.81%	2.69%	3.46%	2.99%	4.23%	N/A	N/A	3.49%	4.32%	N/A	N/A	2.99%	8.11%	2.99%	9.28%	3.90%	5.43%
Mini	N/A	N/A	2.40%	6.52%	N/A	N/A	0.00%	7.82%	3.44%	6.19%	0.90%	6.84%	N/A	N/A	1.49%	6.83%	1.90%	6.60%	0.90%	4.27%	1.90%	7.89%	N/A	N/A
Cadillac	N/A	N/A	N/A	N/A	N/A	N/A	0.00%	3.17%	N/A	N/A	1.90%	4.17%	1.90%	3.81%	1.88%	6.65%	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Hyundai	N/A	N/A	0.00%	2.55%	0.00%	2.80%	0.00%	3.03%	1.90%	5.39%	2.99%	4.18%	N/A	N/A	1.90%	7.24%	2.59%	3.62%	2.90%	7.42%	2.90%	6.37%	0.00%	4.73%
Dodge	N/A	N/A	N/A	N/A	N/A	N/A	2.90%	10.02%	3.90%	9.24%	0.00%	5.99%	0.00%	5.68%	0.00%	10.41%	0.00%	10.86%	1.90%	7.74%	1.99%	10.64%	3.90%	6.78%
Acura	0.90%	6.19%	0.90%	4.68%	1.90%	3.82%	1.99%	5.32%	1.90%	4.28%	1.90%	4.06%	N/A	N/A	1.90%	8.52%	1.90%	3.84%	0.90%	3.20%	0.90%	4.53%	0.90%	5.08%
Mitsubishi	N/A	N/A	2.49%	3.84%	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	2.99%	3.50%	N/A	N/A	0.00%	3.31%	N/A	N/A
Jaguar	1.90%	8.73%	1.90%	3.12%	N/A	N/A	1.90%	3.06%	1.99%	2.00%	1.90%	2.57%	N/A	N/A	N/A	N/A	2.90%	6.87%	1.90%	5.14%	N/A	N/A	N/A	N/A
Fiat	N/A	N/A	0.00%	9.01%	N/A	N/A	3.90%	7.53%	3.90%	5.73%	N/A	N/A	N/A	N/A	N/A	N/A	3.90%	3.12%	3.90%	6.05%	N/A	N/A	4.90%	6.08%
Scion	N/A	N/A	N/A	N/A	N/A	N/A	1.90%	3.35%	1.90%	6.94%	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	3.95%	7.59%
Average	2.01%	5.54%	1.77%	4.38%	1.14%	4.58%	1.45%	4.58%	1.93%	4.94%	2.19%	4.43%	1.99%	4.76%	1.21%	5.00%	1.58%	4.92%	2.09%	4.93%	1.92%	5.73%	2.46%	4.35%

Historical Manufacturers Transparency Score

Manufacturer	Transp. Score Q2 2017	Transp. Score Q1 2017	Transp. Score Q4 2016	Transp. Score Q3 2016	Transp. Score Q2 2016	Transp. Score Q1 2016	Transp. Score Q4 2015	Transp. Score Q3 2015	Transp. Score Q2 2015	Transp. Score Q1 2015	Transp. Score Q4 2014
Mazda	6	6	6	6	6	6	6	6	6	6	6
Infiniti	6	6	6	6	6	6	6	6	6	6	6
Mini	6	6	6	6	6	6	6	6	6	6	6
BMW	6	6	6	6	6	6	6	6	6	6	3
Acura	5	6	6	6	6	6	6	6	6	6	3
Jaguar	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	6	6	N/A
Honda	6	6	6	6	6	6	6	6	6	3	3
Volkswagen	6	6	6	6	6	6	6	6	6	3	3
Kia	6	6	6	6	6	6	6	6	6	3	3
Toyota	6	6	6	6	6	6	3	3	3	3	3
Nissan	6	6	6	6	6	6	3	3	3	3	3
Ford	3	3	3	3	3	3	3	3	3	3	3
Dodge	3	3	3	3	3	3	3	3	3	3	3
Audi	6	6	6	6	6	3	3	3	3	3	3
Volvo	3	2	2	2	2	2	3	3	3	3	3
Fiat	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	3	3	N/A
Mitsubishi	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	3	N/A	3
Cadillac	2	2	2	2	2	2	3	3	3	N/A	N/A
Chevrolet	2	2	2	2	2	2	1	1	1	1	3
Chrysler	3	3	3	3	3	3	3	3	1	1	3
Hyundai	6	6	6	6	6	6	1	1	1	1	1
Subaru	5	5	5	5	5	5	2	2	1	1	1

List of cars used to calculate the Lease APR (inferred interest rate) by quarter:

Car Manufacturer	Car Model Q2 2017	Car Model Q1 2017	Car Model Q4 2016	Car Model Q3 2016	Car Model Q2 2016	Car Model Q1 2016	Car Model Q4 2015	Car Model Q3 2015	Car Model Q2 2015	Car Model Q1 2015	Car Model Q4 2014	Car Model Q4 2013
	2017 Honda Accord Sedan LX ($21,630)	2017 Honda Accord Sedan LX ($21,086)	2017 Honda Accord Sedan EX ($23,453)	2017 Honda Accord Sedan LX ($21,387)	2016 Honda Accord Sedan LX CVT ($21,468)	2016 Honda Accord Sedan LX CVT ($20,496)	2016 Honda Accord Sedan LX CVT ($21,435)	2015 Honda Accord Sedan LX CVT ($20,800)	2015 Honda Accord Sedan LX CVT ($21,591)	2015 Honda Accord Sedan LX CVT ($21,160)	2015 Honda Accord Sedan LX Automatic ($21,014)	2014 Civic Coupe LX ($17,600)
	2017 Toyota Camry SE FWD ($20,440)	2017 Toyota Camry SE FWD ($23,419)	2017 Toyota Camry SE FWD ($25,464)	2017 Toyota Camry SE FWD ($22,447)	2016 Toyota Camry SE Sedan Automatic ($21,675)	2016 Toyota Camry SE Sedan Automatic ($21,920)	2016 Toyota Camry SE Sedan Automatic ($22,176)	2015 Toyota Camry SE Sedan Automatic ($23,088)	2015 Toyota Camry SE Sedan Automatic ($21,888)	2015 Toyota Camry SE Sedan Automatic ($24,088)	2015 Toyota Camry SE Sedan Automatic ($22,665)	2014 Toyota Camry L ($22,988)
	N/A	2017 Volkswagen Jetta Sedan SE Automatic ($20,700)	2017 Volkswagen Jetta SE Automatic ($20,900	2016 Volkswagen Jetta Sedan S Automatic ($18,040)	2016 Volkswagen Jetta Sedan S Automatic ($19.315)	2016 Volkswagen Jetta Sedan S Automatic ($17,653)	2016 Volkswagen Jetta Sedan S Automatic ($20,596)	2015 Volkswagen Jetta Sedan S Automatic ($22,700)	2015 Volkswagen Jetta Sedan S Automatic ($19,269)	2015 Volkswagen Jetta Sedan S Automatic ($16,038)	2015 Volkswagen Jetta Sedan S Automatic ($17,995)	2014 Volkswagen Jetta Sedan S ($14,999)
	N/A	2017 Chevrolet Cruze Sedan LS Automatic ($19,607)	N/A	2016 Chevrolet Cruze Sedan LS ($18,510)	2016 Chevrolet Cruze Sedan LS ($18,597)	2016 Chevrolet Cruze Sedan LS ($18,973)	2016 Chevrolet Cruze Sedan LS ($15,510)	2015 Chevrolet Cruze Sedan LS ($16,237)	2015 Chevrolet Cruze Sedan LS ($17,605)	2015 Chevrolet Cruze Sedan LS Manual ($17,858)	2015 Chevrolet Cruze Sedan LS Manual ($17,950)	2014 Chevrolet Cruze LS ($17,438)
	2017 BMW 3 Series - 320i Sedan ($34,790)	2017 BMW 3 Series - 320i Sedan ($41,260)	2017 BMW 3 Series -320i Sedan ($33,888)	2016 BMW 3 Series -320i Sedan ($35,993)	2016 BMW 3 Series -320i Sedan ($33,600)	2016 BMW 3 Series -320i Sedan ($35,375)	2016 BMW 3 Series -320i Sedan ($35,505)	2015 BMW 3 Series -320i Sedan ($30,850)	2015 BMW 3 Series -320i Sedan ($31,445)	2015 BMW 3 Series -320i Sedan ($32,950)	2015 BMW 3 Series -320i Sedan ($31,940)	2014 BMW 320i Sedan ($34,500)
	N/A	2017 Nissan Altima 2.5 S ($22,020)	N/A	2016 Nissan Altima 2.5 S ($23,664)	2016 Nissan Altima 2.5 S ($21,058)	2015 Nissan Altima 2.5 S ($21,801)	2015 Nissan Altima 2.5 S ($18,975)	2015 Nissan Altima 2.5 S ($20,758)	2015 Nissan Altima 2.5 S ($22,175)	2015 Nissan Altima 2.5 S ($22,995)	2015 Nissan Altima 2.5 S ($19,848)	2014 Nissan Altima 4dr Sedan I4 2.5 S ($21,500)
	N/A	2017 Hyundai Elantra SE Automatic ($26,248)	2017 Hyundai Elantra SE Automatic ($20,060)	2017 Hyundai Elantra SE Automatic ($17,750)	2016 Hyundai Elantra SE Automatic ($16,250)	2016 Hyundai Elantra SE ($16,866)	N/A	2015 Hyundai Elantra SE ($16,483)	2015 Hyundai Elantra SE ($18,000)	2015 Hyundai Elantra SE Manual ($15,794)	2015 Hyundai Elantra SE Manual ($17,055)	2014 Hyundai Sonata SE 2.0T ($24,010)
	N/A	2016 Kia Optima LX ($19,314)	2017 Kia Optima LX ($23,400)	2016 Kia Optima LX ($21,839)	2016 Kia Optima LX ($21,370)	2016 Kia Optima LX ($22,945)	N/A	2015 Kia Optima LX ($19,440)	2015 Kia Optima LX ($18,390)	2015 Kia Optima LX ($19,485)	2015 Kia Optima LX ($19,208)	2014 Kia Soul Base (A6) 4dr H ($16,236)
	N/A	N/A	N/A	N/A	N/A	N/A	N/A	2015 Chrysler 200 Limited Sedan ($19,540)	2015 Chrysler 200 Limited Sedan ($20,460)	2015 Chrysler 200 Limited Sedan ($22,220)	N/A	2014 Chrysler 200 ($22,800)
	N/A	2017 Mazda3 Sport 4D Sedan ($20,030)	2017 Mazda3 Sport Sedan ($17,869)	2016 Mazda3 i Sport ($17,418)	2016 Mazda3 i Sport ($16,781)	2016 Mazda3 i Sport ($18,000)	2016 Mazda3 i Sport ($18,583)	2015 Mazda3 4-Door i SV ($23,710)	2015 Mazda3 4-Door i SV ($17,115)	2015 Mazda3 4-Door i SV ($18,226)	2015 Mazda3 4-Door i SV ($17,040)	2014 Mazda 3 Sedan ($20,599)
	2017 Acura ILX ($22,450)	2017 Acura ILX ($24,999)	2017 Acura ILX ($23,500)	2017 Acura ILX ($27,922)	2016 Acura ILX 5-Speed Automatic ($24,500)	2016 Acura ILX 5-Speed Automatic ($25,614)	N/A	2015 Acura ILX 5-Speed Automatic ($31,656)	2015 Acura ILX 5-Speed Automatic ($25,995)	2015 Acura ILX 5-Speed Automatic ($23,987)	2015 Acura ILX 5-Speed Automatic ($22,512)	2014 Acura TL ($36,960)
	N/A	2017 Subaru Outback 2.5i ($29,500)	2017 Subaru Outback 2.5i ($24,313)	2016 Subaru Outback 2.5i ($25,200)	2016 Subaru Outback 2.5i ($27,953)	2016 Subaru Outback 2.5i ($24,161)	2016 Subaru Outback 2.5i ($26,817)	2015 Subaru Outback 2.5i ($28,043)	2015 Subaru Outback 2.5i ($25,278)	2015 Subaru Outback 2.5i ($27,802)	2015 Subaru Outback 2.5i ($22,500)	2014 Subaru Outback ($22,998)
	2017 Ford Fusion SE FWD ($22,713)	2017 Ford Fusion SE FWD ($19,761)	2017 Ford Fusion SE ($21,235)	2016 Ford Fusion SE ($24,180)	2016 Ford Fusion SE ($21,680)	2016 Ford Fusion SE ($23,895)	N/A	2015 Ford Fusion SE ($22,371)	2015 Ford Fusion SE ($23,370)	2015 Ford Fusion SE ($20,156)	2015 Ford Fusion SE ($22,474)	2014 Ford Fusion ($20,697)
	N/A	N/A	N/A	2016 Dodge Charger SE ($27,495)	2016 Dodge Charger SE ($26,771)	2016 Dodge Charger SE ($27,490)	2016 Dodge Charger SE ($28,524)	2015 Dodge Charger SE ($30,190)	2015 Dodge Charger SE ($26,900)	2014 Dodge Charger SE ($26,453)	2014 Dodge Charger SE ($25,020)	2014 Dodge Charger ($27,015)
	2017 Audi A4 2.0 TFSI Premium FWD ($52,625)	2017 Audi A4 2.0 TFSI Premium FWD ($37,584)	N/A	2017 Audi A4 2.0 TFSI Premium FWD ($36,980)	2016 Audi A4 2.0T FWD ($37,500)	2016 Audi A4 2.0T FWD ($40,945)	2016 Audi A4 2.0T FWD ($38,495)	2015 Audi A4 2.0T FWD ($34,000)	2015 Audi A4 2.0T FWD ($36,000)	2015 Audi A4 2.0T FWD Multitronic ($36,000)	2015 Audi A4 2.0T FWD Multitronic ($32,982)	2014 Audi A4 ($35,253)
	2017 Infiniti Q50 ($32,912)	Infiniti 2017 Q60 RWD ($38,590)	2017 Infiniti Q50 ($34,305)	2016 Infiniti Q50 3.7 ($37,107)	2016 Infiniti Q50 3.7 ($32,500)	2016 Infiniti Q50 3.7 ($30,995)	N/A	2016 Infiniti Q50 3.7 ($34,310)	2016 Infiniti Q50 3.7 ($39,545)	2014 Infiniti Q50 3.7 ($34,680)	2014 Infiniti Q50 3.7 ($36,334)	2013 Infiniti G37 ($33,835)
	N/A	2017 Mini Cooper Hardtop ($26,424)	N/A	2016 Mini Cooper Hardtop ($25,045)	2016 Mini Cooper Hardtop ($26,220)	2016 Mini Cooper Hardtop ($21,373)	N/A	2015 Mini Cooper Hardtop ($25,053)	2015 Mini Cooper Hardtop ($18,921)	2015 Mini Cooper Hardtop ($21,000)	2015 Mini Cooper Hardtop ($23,550)	N/A
	N/A	N/A	N/A	N/A	2016 Volvo S60 T5 Drive-E ($31,000)	2016 Volvo S60 T5 Drive-E ($36,295)	N/A	2015 Volvo S60 T5 Drive-E ($37,054)	2015 Volvo S60 T5 Drive-E ($33,750)	2015 Volvo S60 T5 Drive-E ($37,397)	2015 Volvo S60 T5 Drive-E FWD ($33,163)	N/A
	N/A	2017 Fiat 500 POP Automatic ($16,730)	N/A	2016 Fiat 500 POP Automatic ($14,490)	2016 Fiat 500 POP ($19,350)	N/A	N/A	N/A	2015 Fiat 500 POP ($18,676)	2015 Fiat 500 POP ($17,495)	N/A	2014 Fiat 500 ($14,495)
	2017 Jaguar 2.0D ($42,000)	2017 Jaguar 2.0D ($38,245)	N/A	2016 Jaguar XF 35T Premium ($54,245)	2016 Jaguar XF 3.5T Prestige ($54,700)	2016 Jaguar XF Premium ($55,091)	N/A	N/A	2015 Jaguar XF 2.0T Premium ($49,974)	2015 Jaguar XF 2.0T Premium ($47,625)	N/A	N/A
	N/A	2017 Mitsubishi Lancer ES 5MT ($18,482)	N/A	N/A	N/A	N/A	N/A	N/A	2015 Mitsubishi Lancer GT ($17,320)	N/A	2015 Mitsubishi Lancer ES 5MT ($20,905)	N/A
	2017 Mercedes-Benz E300 ($50,245)	2017 Mercedes-Benz E300 ($52,585)	2017 Mercedes-Benz E300 Sedan ($49,750)	2016 Mercedes-Benz E350 Sedan ($48,416)	2016 Mercedes-Benz E350 Sedan ($52,282)	2016 Mercedes-Benz E350 Sedan ($52,256)	N/A	2015 Mercedes-Benz C-Class Sedan ($50,106)	N/A	2015 Mercedes-Benz E250 Blue TEC Sedan ($55,100)	2015 Mercedes-Benz E250 Blue TEC Sedan ($53,835)	2014 Mercedes-Benz C-Class Sedan ($39,286)
	N/A	N/A	N/A	2016 Cadillac ATS Sedan RWD 2.5L Standard ($28,700)	N/A	2016 Cadillac ATS Sedan RWD 2.5L Standard ($43,800)	2016 Cadillac ATS Sedan RWD 2.5L Standard ($36,010)	2015 Cadillac ATS Sedan RWD 2.5L Standard ($30,132)	2015 Cadillac ATS Sedan RWD 2.5L Standard ($35,018)	N/A	N/A	N/A
	N/A	2017 Buick Lacrosse FWD ($35,099)	N/A	N/A	2016 Buick LaCrosse ($34,418)	2016 Buick LaCrosse ($39,310)	N/A	2015 Buick LaCrosse ($42,100)	N/A	N/A	2015 Buick LaCrosse ($29,665)	2014 Buick LaCrosse ($33,409)
	N/A	2017 Lexus ES 350 ($41,821)	N/A	2016 Lexus ES 300 ($36,868)	2016 Lexus ES 300 ($38,222)	2016 Lexus ES 300 ($36,115)	2016 Lexus ES 300 ($42,057)	2015 Lexus ES 300 ($35,940)	N/A	N/A	N/A	2014 Lexus ES 300 ($42,957)
	N/A	N/A	N/A	2016 Scion TC Automatic ($21,662)	2016 Scion TC Manual ($19,364)	N/A	N/A	N/A	N/A	N/A	N/A	2014 Scion tC ($20,909)

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