I need help with a very large question that requires more space than what is given in this 'ask a question' box. it is in regards to car inurance and figuring out how much will need to be paid ect. ect. if anyone is willing to help let me know.

Question

dumbcow · Answer

whats the question?
is it better to lease or buy...it depends

anonymous · Answer

@dumbcow  you're really smart and good at math ahaha!

anonymous · Answer

the question is in regards to a large chart and is asking how much the person will have to pay with down payment regarding the information

dumbcow · Answer

are you given interest rate, length of loan/lease, desired payment ?
with that we could determine amount of down payment needed

dumbcow · Answer

do you see the "Attach file" button below, try to use that

anonymous · Answer

Sharese is tired of riding the bus. She has been saving since she began working at The 7th Inning and she thinks that she has saved up enough to buy a car. After doing her homework and investigating the possibilities, she has settled on a cute red Honda Civic. She does not have a lot of money to put down on the car and she wants her payments to be as low as possible. When she talks with the salesman about financing, she discovers that she has several financing options to consider. 

Buy vs. Lease comparison table. 

To purchuse: 
Actual Purchase Price = MSRP less any discounts.* $14,900 
Down Payment 5% $745 
Sales Tax Rate 7% 
Amount Financed =
Purchase Price + Sales Tax – Down Payment $15,198 
Loan Term (months) 48 months 
APR 6.15% 
Monthly Loan Payment $357.97 
Total of all monthly payments + down payment $17,927.56 
Residual Value ÷ Equity Value at conclusion of loan $6,495.00 for buyer 
Total monthly payments + down payment – residual value  $11,432.56 
Taxes and License Fees $500 


To lease
Capitalized Cost: (cost of the car)  $14,900 
Cap Reduction 5% (similar to down payment) $745 
Sales tax paid only on lease payments  7% 
Amount Leased =
Purchase Price – Cap Reduction – Residual Value (dealer determined) $7,660 
Lease Term (months) 48 months 
Interest Rate 6.15% 
Monthly Lease Payment including 7% tax and cost of money factor**  $227.50 
Total of all monthly payments + cap reduction payment $11,665 
Residual Value at conclusion of lease $0 for lessee
$6495.00 for dealer
 Total payments plus cap reduction payment minus equity $11,665 
Taxes and License Fees $500 


1.At the time of signing, roughly how much will Sharese have to pay if she wants to purchase the car with the minimum required down payment? How much will she have to pay if she wants to lease the car? Can she afford the down payment for either option?

dumbcow · Answer

not sure i understand, looks like all the info is provided
she will have to pay all the monthly payment+down payment

dumbcow · Answer

in either case she has to pay $745 up front
whether she can afford it, i don't know what her income is ?

anonymous · Answer

yea thats what i dont understand.. this is a case study queston in my college business class.. and i am so very confused.. that is all i was given to go by thank you for helping tho.

anonymous · Answer

with the lease - she has no down payment and monthly payment so $227.50

I know there is no money down for the leasee due to given equation
Amount Leased = Purchase Price – Cap Reduction – Residual Value (dealer determined) $7,660 (14,900-745-6495). so no out of pocket expense

for the buyer option - she has a down payment of $745 and a monthly payment of $357.97

since we do not have her salary income and the only stipulations are low down payment and lower payments - well based on that she would prefer to lease.

anonymous · Answer

that actually makes sense thank you so so much

anonymous · Answer

you are welcome.  my degree is accounting/finance - so I am at an advantage

anonymous · Answer

that makes sense why you know all this stuff. Im trying to get my AS in business management I never expected this kind of stuff to be incorporated into it.. and the book is just as confusing as the questions to me. so i really need the help thank you again.

dumbcow · Answer

observation: in the long run it balances out though
if you buy the car you pay more initially but if after the 48 months you then sell the car you recoupe some of your losses and thus depending on value of car after 48 months the net loss would be about the same

anonymous · Answer

yes from personal experiences i hate lease - looks good up front with low payments and low down payments - but if you buy right out - you will spend less overall.  Good point dumbcow