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 Very good credit: 8. 3% $10, 000 down payment Salvage Value: $ 12, 885 Monthly payments: $438

Option 2: Lease • $10, 000 down payment • Lease term: 60 months • Mileage option: 15, 000 mi/yr • Salvage Value: $0. 00 • Monthly payment: $236

Annual Worth Analysis Buy Cash Flow Lease Cash Flow S =$ 12, 885 A = 432 $ 10, 000 S =$ 0. 00 N = 60 A = 232 $ 10, 000 N = 60

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

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)

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)

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.

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.

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.

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)

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.