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Team #6 Presentation Buy or Lease a Car

Team #6 Presentation Buy or Lease a Car. Joyce Barcimo - Presenter Brian Lombardi - Tech Malika Singh - Organizer. Our Situation:. Buy or Lease. Lexus IS 250 Reliable & safe High quality Good gas mileage Good resale value. Option 1: Buy. Base MSRP: $31,425 Finance term: 60 months

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Team #6 Presentation Buy or Lease a Car

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  1. Team #6 PresentationBuy or Lease a Car Joyce Barcimo - Presenter Brian Lombardi - Tech Malika Singh - Organizer

  2. Our Situation: Buy or Lease • Lexus IS 250 • Reliable & safe • High quality • Good gas mileage • Good resale value

  3. Option 1: Buy • Base MSRP: $31,425 • Finance term: 60 months • Very good credit: 8.3% • $10,000 down payment • Salvage Value: $ 12,885 • Monthly payments: $438

  4. Option 2: Lease • $10,000 down payment • Lease term: 60 months • Mileage option: 15,000 mi/yr • Salvage Value: $0.00 • Monthly payment: $236

  5. S =$ 0.00 S =$ 12,885 N = 60 N = 60 A = 232 A = 432 $ 10,000 $ 10,000 Annual Worth Analysis Lease Cash Flow Buy Cash Flow

  6. Sensitivity Analysis • Buying or Leasing • Various Down Payment • Various APR’s • Different Financial Periods

  7. Various Down Payments and Years • 3 to 5 year range • Down payments varied from $0 to $10,000 • Buying is better for the long-term (5 years) • Leasing is better for the short-term (3 years)

  8. Various APR’s and Financial Periods • 3 to 5 years • Down payment: $10,000 • Different APR’s did not affect mo. pmt. very much • Buying is better for the long-term (5 years) • Leasing is better for the short-term (3 years)

  9. Our Decision: • MSRP: $31,425 • Period: 5 years • Buy salvage value: $12,885 • Lease salvage value: $0.00 • Buy: $5,749.69 (EUAC) • Lease: $7,932.92 (EUAC) • Difference: $2183.83/yr • Buying is a better choice because it has a lower Equivalent Uniform Annual Cost.

  10. Advantages and Disadvantages of Leasing • Advantages: Allows you to continuously drive new cars, while having a less monthly payment. Also, leasing allows you not to hassle with selling your car. • Disadvantages: Leasing vehicles have a yearly mileage limit, higher insurance rates.

  11. Advantages and Disadvantages of Buying • Advantages: You can sell your car when you want to with no mileage restrictions. Also you can modify the car. • Disadvantages: The vehicle may begin to break down, as the warranty will end. The car will begin losing more value in the end.

  12. References • www.kbb.com (Vehicle salvage value, advice about lease vs. buy) • www.lexus.com (Vehicle car pricing information) • www.autos.msn.com (More advice about lease vs. buy) • Text (Annual Worth Analysis)

  13. Our Decision: • MSRP: $31,425 • Period: 5 years • Buy salvage value: $12,885 • Lease salvage value: $0.00 • Buy: $5,749.69 (EUAC) • Lease: $7,932.92 (EUAC) • Difference: $2183.83/yr • Buying is a better choice because it has a lower Equivalent Uniform Annual Cost.

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