by Kelly Eargle

Question: I've been thinking about leasing a new car, so I've been paying special attention to the ads lately, and I have a question. What do they mean by "capitalized cost reduction"? - Betty S.

Answer: That's just a fancy term for making a bigger down payment. In an auto lease, the capitalized cost represents the sales price of the vehicle, taxes and other associated costs such as required insurance, service agreements, options, administrative fees and taxes. By choosing to make a larger down payment, you can achieve a lower monthly payment but you also have reduced your own capital - money that could be invested or put into a savings account, taking into consideration "rainy day savings" and the comparative savings interest rate. Many people choose lease financing over an auto loan to be able to hang on to more of stash of their cash.

Question: My daughter just graduated from college and got her first real job. Now she has her eyes on a fancy new car, even though she has had problems with her credit cards. She says she can swing the deal through the dealer's "first-time buyer" financing offer. Wouldn't she be better off going through a bank? - Fred G.

Answer: It depends on the extent of your daughter's credit problems. She might not qualify for a loan from a bank or credit union. A first-time buyer loan could be a costlier loan in terms of the interest, based upon an assumption of higher credit risk. However, it might be the only way for her to get that car. And, if she does, it is a chance to boost - or further tarnish - her credit record.

Kelly Eargle is an auto financing expert with the Credit Union of Colorado, which has a central Denver branch at 14th & Logan. Email you question to EargleK@cuofco.org.

Not all questions will result in publication.