Sunday, July 30, 2006

HDTV Myths

Plasma TV sets start out bright and beautiful, but burn out to an early death. Every single high-definition television program looks equally crisp and gorgeous. The higher resolution of a 1080p high-def set means that your shows and DVDs will always look better than on a more ordinary 720p set.

Are these gospel truths about HDTV? Nope. Just a sampling of the many popular factoids, half-truths, and myths that can make choosing and enjoying a high-def television set complicated and confusing--and in some cases, needlessly expensive.

To help dispel these myths, we consulted an A-team of HDTV experts. The challenge: Identify and debunk troublesome, costly, and all-too-prevalent misconceptions about high-definition TV--from the basics of broadcasting to the arcane secrets of hardware. We lay out the facts you'll need to have at your disposal in order to make the right decisions. Armed with this information, you'll know just what to expect when you take the HDTV plunge. For more of these tips, see

"An HD set is all you need to get high-def programs."

In our dreams! To experience the vibrant images and the Dolby 5.1 sound of true high-definition TV, you need several things--and an HD-ready set (a display that can accept HD-format input and display it at a minimum of 720 lines of progressive-scan or noninterlaced video) is just one of them.

First, a show needs to be shot in high definition, and that may not be the case, even when a show claims that it is. For example, although TNT's digital channel presents Law & Order reruns in high definition, early episodes weren't shot in HD; as a result, in those episodes, you see a 4:3 standard-def show that is stretched and scaled up to high-def size. It doesn't look great.

Second, the program must be transmitted in high def by a station that you can receive either over the air or from your cable or satellite provider. ("Shown in high definition where available" doesn't mean it's available to you.)

Third, you need an HD receiver to process the signal. A set that has a built-in ATSC digital tuner can display over-the-air HD broadcasts with nothing more than a good antenna. ATSC, which stands for Advanced Television Standards Committee, is the group that defined the 18 formats of the coming digital TV system, only six of which are considered high definition. (And by the way, there is no such thing as an HD antenna--there are just antennas.) If your HDTV set comes with picture-in-picture, you won't get high-def-picture-in-high-def-picture unless your set comes with two ATSC tuners.

An HD-ready set lacks such a tuner, so you'll need either a set-top box with a tuner or an HD box from your cable or satellite service. Regardless of the box you get, you need to make sure that you're feeding its digital output into your HD-ready set.

Finally, you must tune your HDTV set to a high-definition channel showing actual HD content. Picking up the analog transmission from your local affiliate on your high-def cable box won't result in delivery of a show in HD.

"The higher the screen resolution, the better the image quality of an HDTV."

Most HDTV sets today are 720p displays, but a few vendors are beginning to offer 1080p sets--either LCDs or rear-projection, micro-display (LCD, LCoS, DLP) models. As yet, no 1080p plasmas are available (though some have been announced in very large sizes). These sets will clearly do the best job of handling 1080p content--when it arrives. But today's HDTV shows are shown in either 720p or 1080i format: Nobody broadcasts in 1080p because of bandwidth issues. Movies may someday be available in 1080p on optical media, but Hollywood hasn't settled on the next-generation hardware standard (Blu-ray or HD-DVD), much less chosen a content format.

Lack of 1080p content is one reason some vendors are holding off on introducing 1080p sets. But those that are selling 1080p sets point out that some HDTV is broadcast in 1080i, and that such content arguably looks better on a 1080p set because less scaling is involved. (On the other hand, 720p content has to be scaled up for a 1080p set.) Here again, though, the capabilities of the human eye come into play: You'll probably notice the superior resolution of 1080p only if you sit very close to the set--or have an extremely large set.

"You have to relinquish the fluid motion of a CRT screen when you move up to HDTV."

Not at all. You can purchase a high-definition CRT set--and you'll save a lot of money if you do, because they cost less than LCD and plasma-screen televisions of similar size. But in doing so you'll lose the sleek, flat-panel chic of a plasma or LCD set. If you want that slim profile, however, be aware that LCDs have trouble rendering fluid motion as a result of their somewhat pedestrian response times. Plasma and DLP screens aren't susceptible to this technological weakness.

"Burn-in will wreck your plasma HDTV within a year."

The plasma display has advanced since the days when most of us saw plasmas only at airports, where constantly switched-on screens showing formatted flight information suffered from burn-in--ghost images that linger on screen despite no longer being transmitted.

Today, vendors rate the life expectancy of high-quality plasma TVs at 60,000 hours. That works out to more than 20 years of use if you watch eight hours a day, 365 days a year; it's also about the same lifetime claimed for LCDs and CRTs (the latter are similarly prone to burn-in because, like plasma TVs, they depend on phosphor-based displays).

What changed? Phosphors and gas mixtures in the new plasma panels greatly reduce the risk of burn-in, and some sets use burn-in-prevention software. "If you're not worried about burn-in for your CRT, you shouldn't worry about it for your plasma TV," says the Society for Information Display's Larry Weber.

"Bright LCDs look beautiful everywhere, and they use much less power than plasma or CRT sets do."

It's true that LCDs are bright, which makes them a good choice if you watch TV in a brightly lit room. But if you're inclined to turn down the lights for your rendezvous with Entourage or Medium, you probably don't want the brightest set on the block, and plasmas and CRTs offer superior color capabilities without introducing the response-time (and associated motion artifacting) issues that have long plagued LCDs.

As for power consumption, a study by Japan's Green Purchasing Network--an organization dedicated to promoting environmentally friendly purchasing by consumers, business, and government--concluded that the power consumption of similar-size plasma, CRT, and traditional LCD displays in real-world viewing situations is practically the same. However, the coming generation of LCDs that use LED backlighting, while expected to deliver significantly better color, will consume roughly twice as much power as traditional LCDs of the same size.

"Standard-definition TV is unwatchable on HDTV."

This is a case of hyperbole, not outright fabrication. True, standard-def programming will never look as good as HD programming on an HDTV because of scaling issues. But vendors are toiling to better the SD experience on their HD sets, and the success of these efforts varies between vendors and sets. So if you're expecting to watch standard-definition TV on an HD set, make sure that you do your own taste tests.

These may not be the only myths you'll encounter in your quest for the perfect HDTV--and you can't trust everything you hear (or see) in a showroom. So careful research is essential before you pay for what's likely to be the most expensive TV set you've ever bought. And that is the gospel truth.

Friday, July 21, 2006

Using home equity loan to buy a car

Q. Dear Dr. Don, We are looking to buy a used car and trying to think of a better way to finance the purchase. I found out that we could take out a second mortgage, which is tax deductible, to finance the car purchase versus getting a straight car loan. Is this a good idea? Thanks.

A. Dear Tamara,
For people who have a fair amount of discipline in how they manage their finances, a home equity loan or home equity line of credit (HELOC) can make perfect sense as a way to finance a car, new or used. If you're struggling with large credit card balances or have problem credit, a home equity loan might not be right for you.

Not everyone can make use of the mortgage-interest deduction when filing his or her income tax return, but if you're using the deduction now on your first mortgage, odds are you'll be able to use it on your home equity loan, too. IRS Publication 936, Home Mortgage Interest Deduction 6, lays it all out. Talk to a tax professional if you're still not sure.

By being able to deduct the interest expense, you reduce the effective rate of interest on the loan. The interest expense on a conventional auto loan isn't tax-deductible. As I write this, Bankrate's national average for a HELOC is 8.09 percent and 7.8 percent for a home equity loan. The national average for a three-year auto loan on a used car is 8.88 percent. If you're in the 25-percent marginal federal income tax bracket the effective rate on the HELOC is about 6 percent.

A HELOC is a variable-rate loan, and the interest rate is normally tied to the prime rate. Since the prime rate moves in lock step with changes in the targeted federal funds rate, and that rate has been rising steadily for more than two years, it takes a bit of courage to sign up for a HELOC to finance your car.

In contrast, a home equity loan will have a fixed interest rate, and the loan payments are self-amortizing, meaning the payments are large enough to pay the interest expense and pay off the loan over the life of the loan. In the early years of a HELOC, its required loan payments are interest-only, and you have to have the financial discipline to make principal payments, too.
You can use the Bankrate rates home equity rates search tool to comparison-shop for a loan or line of credit.

A car is a depreciating asset. You don't want to take 10 years to pay off the loan on a car that you'll drive for five years. Regardless of which loan you choose, plan on paying off the used car over the time you expect to own it. That way you'll have some equity in the car when you go to buy its successor.

Thursday, July 20, 2006

Atlanta car loan fraud ring busted

Six Atlantans were arrested July 12 and two others already in custody have been named in connection with a car loan fraud ring operating under the name "Xquisite Empire" that bilked lenders for $2.4 million.

William Marshall, 39, and Kenneth David Harvey, 38, both of Atlanta, who are alleged to be the leaders of the conspiracy, are already in custody on unrelated charges. Arrested today were: Dartez Daniels, 37, Sheena Mullins, 22, Keyomo Butler, 35, Tara Brown-Ferrell, 35, Sheer Godfrey-Fields, 34, and Melissa Fields, 35, all of Atlanta.

Beginning in early 2002, Marshall and Harvey allegedly created a scheme to defraud lenders by fraudulently obtaining 224 high-end luxury vehicles valued at $11.2 million, using more than 50 so-called "straw" purchasers to buy or lease the vehicles. Marshall and Harvey created a company called "Xquisite Empire," which ostensibly was in the rental car business, but had no legitimate income from rental cars.

Marshall and Harvey allegedly supplied straw purchasers with false credit information, which the straw purchasers subsequently listed on loan applications. Marshall, Harvey, and others instructed each straw purchaser to buy as many cars as possible within a 30 day period to prevent prospective lenders from learning about the straw purchasers' true liabilities through seeing the most recent loans relating to fraudulent purchases appear on credit reports.

In return, Marshall and Harvey paid the straw purchasers fees for obtaining the vehicles. Marshall and Harvey took possession of the vehicles, turning them over to others who wanted to conceal their ownership of the vehicles. When the payments to the lenders stopped, and the lenders tried to repossess the vehicles, the straw purchasers did not know where the vehicles were. Only Marshall and Harvey knew who the actual possessors were.

"This fraud scheme was based on luxury cars and lies," said U.S. Attorney David E. Nahmias. "The conspirators allegedly designed the scheme to rapidly and fraudulently acquire large numbers of luxury vehicles through straw purchasers. The defendants then sold the cars to others who were unknown to the original lenders, leaving the lenders with very little recourse."