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# Cars: Buy v.s. Lease - PowerPoint PPT Presentation

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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Presentation Transcript

Brent Groom

David Tran

Luu Tran

Presentation Topics
• Sensitivity Analysis
• Decision
• Resources
• Basic Assumptions for 5 years:
• Basic Research Results

for the Toyota Camry V6 LE

• Basic Research Results:
• Basic Calculated Results:

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

Sensitivity Analysis
• Variables:

-Down Payment

- Leasing term (n)

- Mileage

Sensitivity Analysis
• Varying Down Payment
Sensitivity Analysis
• Varying the over mileages
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

Decision
• Monthly cost analysis Using EUAC:

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.

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

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/