In: Finance
You have been looking around for a nice car and have found the car you want for the right price. All along, you have told the dealer that you want to purchase the car. It will cost you $45,000 out the door. You will put 25% down and take out a 4-year car loan. The interest rate you got from a local bank is 2.99% for 48 months.
You made the deal and now you need to “finalize” the paperwork with the dealer’s finance officer. He offers you an opportunity to lease the car and save you money every month! What a deal!! Here are the terms:
Your savings account pays you 0.80% per year. You typically drive 13,000 miles per year. You plan on bringing the car back in perfect condition and expect to get your deposit back.
Answer: Please refer the below tables calculation:
we have assumed that at the end of the lease tenure the person will Buy the car at residual value. Clearly the leasing is a bit costlier compared to buying a car using finance. I would buy a car instead of leasing.
Note: here capitalised cost is $4,500 which is less than residual value - it seems like a typo. Capitalised cost can't be lower than residual value