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Team 4 Lease or Buy A Car

Team 4 Lease or Buy A Car

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Team 4 Lease or Buy A Car

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  1. Team 4 Lease or Buy A Car Nhu Nguyen – Techie Brent Demers – Summarizer Keng Chon Sit - Summarizer Ramon Valdez - Organizer

  2. Situation: To Lease or Buy2008 BMW 328i Sedan • Spacious, Sporty and Luxurious • EPA fuel economy estimates 19-21 MPG city, 27-30 highway. • MSRP: $34,216 • Miles Driven: 10,000 per years • Down Payment: $2,900 • Duration: 3 years or 36 months • Insurance: 156.44 per month • Maintained and repair cost

  3. LEASE or Buy continue. Variables: • Lease: • Payment per period: $369 • Down Payment: $2500 + $400 security deposit = $2900 • Buy: • Interest rate: 3.9% • Depreciation rate: 9.35% • Payment per period: $881

  4. Assumption • Lease and buy: • Every 15,000 miles or 16 months: maintained service is require (explain) = $150 • Every 3,000 - 4,000 miles: maintain is require (oil change) = $30 • Every 10,000 miles or 12 months: small repair require (windshield wiper) = $20 • Every 20,000 miles: Change break pad 150x4 = $600 • Tire will not be change: • Car not run over 35,000 miles • Buy: • sale the car in 3 years

  5. Assumption Continue • Insurance for Lease and Buy: • 2008 BMW 328i Sedan • Engineer • single • City Pomona • dob : 1985 • Year first licensed : 16 yrs old • No accident or violation

  6. Monthly Worth Analysis Buy Cash FlowLease Cash Flow Salvage value=$25,487.82 Salvage value = $0 A=$ 655.89 n =36 A=$1,167.88 n = 36 $2,900.00 $2,900.00 • A is the avg. monthly Cash Flow of the following: • Monthly Payments • Maintenance Services • Insurance • Repair (s) • Gasoline

  7. Total Cost Graph up to 36 months • Total Cost For every 6 months

  8. Sensitivity Analysis: Annual Mileage + Penalties Buy: No penalties Lease: Over 10,000mi/year +$.20 per mile

  9. Sensitivity Analysis: Down Payment & Credit Rating • The Lease payment is constant $379 while the down payment influences the buy payment • Credit Rating: Will effect payment for Buying

  10. Sensitivity Analysis: Time Owned & Salvage Cost Lease is better choice for 1- 3 years . Buy is what the time owned factor favors.

  11. Conclusion: Benefits • Total cost for 3 years: • Lease: $19880.43 • Buy: $19456.05 • Have salvage value • Short Term Goal (1 – 3 years): • Leasing • Long Term Goal (3 years or more): • Buy

  12. Resources • BMW in Monrovia: Interview a Dealership sale person through phone: Roberto 626 358 4269 • http://www.bmwusa.com/Standard/Content/FinancialServices/FinancingOffer/Default.aspx?enc=lTh/OtFZJYyyyRi1sAj9Rg • Kelly Blue Book • www.aaa.com (insurance)