Obama Motors’ $41,000 fiasco.
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Well, maybe someone has been thinking about them, at least. Because GM is trying to make the Volt look like a better deal than it obviously isn’t.
The automaker is talking up a lease deal that’s been put on the table: Just 36 easy payments of $349 per month! Compared to the average (according to GM) $450 per month lease payment for a standard car, that’s a sweet deal, especially when you factor in the Volt’s lower operating costs due to its virtual non-use of gasoline. (The Volt is driven entirely by electric motors and batteries, with a small onboard gasoline engine providing back-up juice to the battery pack.)
But hold on. There’s more to it than that.
First, there’s the pesky $2,500 up-front payment the lease terms require. If you fold that into the lease cost — which GM doesn’t in the press release but bet your bippie the lease manager will — the total cost of the lease jumps to about $420 per month.
And you only get the car for three years. After which, you’re out about $15k and no longer have the car. If you sign up for a new lease — or buy the car (assuming GM allows this) then you’d have to factor in the additional (many) thousands of dollars that would involve.
Such a deal!
Roughly ten percent of the work force isn’t working (closer to 20 percent, if you go by the way they used to do the accounting). The working and middle classes — ostensibly, the people who care about saving money — are rightly scared white about buying into new debt of any kind … and GM wants to rent them a $420-per-month electric car because … it’s good on gas?
Meanwhile, a 2011 Ford Fiesta — built by a privately-owned concern not affiliated with Obama Motors — is selling a 40 mpg Fiesta for $13,320. Not renting it to you for three years, mind you.
They’re selling the whole car for $13k. You get to keep it and everything!
Not only will your monthly payment be a helluva lot less than $419 (around $250 over five years, assuming you’ve got decent credit), but at the end of the five years, you own the thing. That’s money in your pocket. You have a “free” car (or at least, no monthly car payment) for the next several years, or as long as you keep the thing and for as long as it’s still running reliably — which, given the long legs of almost any modern car, can easily be 10-15 years or more.
Amortize that $13k for the Fiesta (or $10k for a Nissan Versa or any one of a dozen or more medium-small sedans that can get 40-ish mpg and which cost less than $15k) over a useful life of say 10-12 years and see what your monthly nut turns out to be vs. renting a $420 per month Volt for three years.
Let me save you some time with the calculator. Assume a total cost of $16k — the $13k for the car plus interest costs over five years for the loan. Own the car for 12 years. Your cost: About $1,300 annually; or about $108 bucks a month. That’s assuming the car’s not worth anything after 12 years, too — which probably won’t be the case if it’s still running decently (which with proper car it likely will be). Which means it’ll still be worth something, even after 12 years. Maybe not much — but probably at least $1,000 or so.
Maybe your teenage kid will want it.
Meanwhile, at the end of the three-year Volt lease, you’ve got… bupkis. No car, no equity in the car — and you’ll be $15k lighter in the loafers. GM hopes you will sign up for another $420 per month payment plan, in proper American Consumer fashion.
But isn’t that how America got into the spot its currently in?
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