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Team #5 Presentation Buy or Lease a Car

Team #5 Presentation Buy or Lease a Car. Organizer- Kenny Klingaman Techie- Rolando Arevalo Summarizer- Elizabeth Young. Our Situation:. Buy or Lease. Chrysler 300 Reliable & safe High quality Good gas mileage Spacious. Scenario. Single 24 year old male engineer renting in La Verne

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Team #5 Presentation Buy or Lease a Car

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  1. Team #5 PresentationBuy or Lease a Car Organizer- Kenny Klingaman Techie- Rolando Arevalo Summarizer- Elizabeth Young

  2. Our Situation: Buy or Lease • Chrysler 300 Reliable & safe • High quality • Good gas mileage • Spacious

  3. Scenario • Single 24 year old male engineer renting in La Verne • Annual Salary of $60,000 • Good driving record and driving for 8 years • Good Credit • 15,000 miles/ year

  4. Option 1: Purchase • Base MSRP: $25,120 • Finance term: 48 months • Very good credit: 8.5% • $4000 down payment • Salvage Value: 14,500 • Monthly payments: $520.57

  5. Option 2: Lease • $4,000 down payment • Lease term: 48months • Mileage option: 15,000 mi/yr • Salvage Value: $0.00 • Monthly payment: $367.00

  6. Determining Annual Worth • A consists of: • Payments • Maintenance ( oil changes) • Insurance • Repairs ( Tires, brakes) • Gasoline (Annual mileage/mpg) x gas price

  7. S =$ 0.00 S 14,500 N = 48 N = 48 A =877.12 A =776.67 $ 4,000 $ 4,000 Annual Worth Analysis Lease Cash Flow Buy Cash Flow

  8. Sensitivity Analysis • Buying or Leasing • Various Down Payment • Various Annual Mileage • Comparing 3, 4, 5 years • Gas Prices • Mpg

  9. Various Down Payments and Years • Down payments varied from $3,000 to $10,000 Various Annual Mileage • Mileage from 12,000 to 20,000

  10. Our Decision: • MSRP: $25,120 • Period: 4 • Buy salvage value: $14,500 • Lease salvage value: $0.00 • Buy: $9,320.04 (EUAC) • Lease: $10,525.44 (EUAC) • Difference: $1205.4/yr • Buying is a better choice because it has a lower Equivalent Uniform Annual Cost.

  11. Advantages and Disadvantages of Leasing 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. • 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.

  12. 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.

  13. References • www.kbb.com (Vehicle salvage value, advice about lease vs. buy) • www.chryslerfinancial.com (Vehicle car pricing information) • www.consumerguide.com (More advice about lease vs. buy) • www.progressive.com (insurance quotes) • Personal Experience • Text (Annual Worth Analysis)

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