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Cars: Buy v.s. Lease PowerPoint PPT Presentation


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Cars: Buy v.s. Lease Brent Groom David Tran Luu Tran Presentation Topics Lease vs. Buy Comparison Sensitivity Analysis Decision Resources Lease vs. Buy Comparison Basic Assumptions for 5 years: Leasing vs. Buying Basic Research Results for the Toyota Camry V6 LE Leasing vs. Buying

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Cars: Buy v.s. Lease

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Cars: Buy v.s. Lease

Brent Groom

David Tran

Luu Tran


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Presentation Topics

  • Lease vs. Buy Comparison

  • Sensitivity Analysis

  • Decision

  • Resources


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Lease vs. Buy Comparison

  • Basic Assumptions for 5 years:


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Leasing vs. Buying

  • Basic Research Results

    for the Toyota Camry V6 LE


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Leasing vs. Buying

  • Basic Research Results:


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Leasing vs. Buying

  • Basic Calculated Results:


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Analysis


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Leasing

S = $0

S = $8,800

n = 60

A = $252

n = 60

$ 4,700

A = $378

$ 4,700

Analysis

Toyota Camry LE V6 Cash Flow Diagram

Buying(cal)


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Sensitivity Analysis

  • Variables:

    -Down Payment

    - Leasing term (n)

    - Mileage


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Sensitivity Analysis

  • Varying Down Payment


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Sensitivity Analysis

  • Varying term


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Sensitivity Analysis

  • Varying the over mileages


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Decision

  • Lease or buy, which one is better?

    - Lease allow lower monthly payment, always under warranty, and drive new car every 2 or 3 years.

    - Buy allow payment –free for a while, resale the car, and able to upgrade

  • Secret price quote.

    Cost of the car that is below the dealer invoice


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Decision

  • Monthly cost analysis Using EUAC:

    Buying: $334

    Leasing: $334

  • Another way of looking at it:

In order to make $8800 in 60 months, need interest rate of .005058% or the nominal interest rate of 6.07%, which is the same as buying.


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Leasing Formulas

  • Residual = 60% *(MSRP)

  • Net cap cost = Negotiate price - down

  • Depreciation = (Net cap cost – residual) / n

  • Finance =(Net cap cost + residual) * money factor

  • PMT = Depreciation + Finance + Tax


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Resources

For new/used car comparison

http://www.autos.yahoo.com

For information how to lease or buy

http://www.leaseguide.com

For the Secret Price Quote http://www.carpricesecrets.com

For Salvalge value and car price:

http://www.kbb.com//

http://www.edmunds.com/

http://www.cars.com/go/index.jsp?aff=national

http://www.leasecompare.com/


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Car- Lease v.s Buy

The End


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