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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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Presentation Transcript
slide1

Cars: Buy v.s. Lease

Brent Groom

David Tran

Luu Tran

presentation topics
Presentation Topics
  • Lease vs. Buy Comparison
  • Sensitivity Analysis
  • Decision
  • Resources
lease vs buy comparison
Lease vs. Buy Comparison
  • Basic Assumptions for 5 years:
leasing vs buying
Leasing vs. Buying
  • Basic Research Results

for the Toyota Camry V6 LE

leasing vs buying5
Leasing vs. Buying
  • Basic Research Results:
leasing vs buying6
Leasing vs. Buying
  • Basic Calculated Results:
analysis8

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)

sensitivity analysis
Sensitivity Analysis
  • Variables:

-Down Payment

- Leasing term (n)

- Mileage

sensitivity analysis10
Sensitivity Analysis
  • Varying Down Payment
sensitivity analysis12
Sensitivity Analysis
  • Varying the over mileages
decision
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

decision14
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.

leasing formulas
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
slide16

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/