Brent Groom David Tran Luu Tran Presentation Topics

Brent Groom David Tran Luu Tran

Presentation Topics n n Lease vs. Buy Comparison Sensitivity Analysis Decision Resources

Lease vs. Buy Comparison n Basic Assumptions for 5 years: Buying Car (2005) Camry LE V 6 Leasing Camry LE V 6 Down $5000 Miles N/A 12, 000 Credit 720

Leasing vs. Buying n Basic Research Results for the Toyota Camry V 6 LE Price $22, 500 Down Payment $4, 700 Nominal interest 6. 07%

Leasing vs. Buying n Basic Research Results: Buying Leasing Monthly $387 $252 Salvage $8, 800 0

Leasing vs. Buying n Basic Calculated Results: Buy Lease PMT $378 $252 Future Value $32, 815 $25, 015

Analysis Buy Lease Re-paint Yes No Payment Higher Lower Mileage limit No Yes Salvage value Get to keep no

Analysis Toyota Camry LE V 6 Cash Flow Diagram Leasing Buying(cal) S = $8, 800 A = $378 $ 4, 700 S = $0 n = 60 A = $252 $ 4, 700 n = 60

Sensitivity Analysis n Variables: - Down Payment - Leasing term (n) - Mileage

Sensitivity Analysis n Varying Down Payment 0 Buying PMT $470 Leasing PMT $344 2500 $421 $295 4700 $378 $252

Sensitivity Analysis n Varying term Month Buying Leasing 36 $595 $372 48 $459 $297 60 $378 $252

Sensitivity Analysis n Varying the over mileages Mileages over Cost/mile Additional charge 1000 $0. 15 $150 2000 $0. 15 $300 3000 $0. 15 $450

Decision n Lease or buy, which one is better? - Lease allow lower monthly payment, always under warranty, and drive new car every 2 or 3 years. - Buy allow payment –free for a while, resale the car, and able to upgrade n Secret price quote. Cost of the car that is below the dealer invoice

Decision n • Monthly cost analysis Using EUAC: Buying: $334 Leasing: $334 Another way of looking at it: Buy Lease Difference Monthly Payment $378 $252 $126 Salvage $8800 0 In order to make $8800 in 60 months, need interest rate of. 005058% or the nominal interest rate of 6. 07%, which is the same as buying.

Leasing Formulas n n n Residual = 60% *(MSRP) Net cap cost = Negotiate price - down Depreciation = (Net cap cost – residual) / n Finance =(Net cap cost + residual) * money factor PMT = Depreciation + Finance + Tax

Resources For new/used car comparison http: //www. autos. yahoo. com For information how to lease or buy http: //www. leaseguide. com For the Secret Price Quote http: //www. carpricesecrets. com For Salvalge value and car price: http: //www. kbb. com// http: //www. edmunds. com/ http: //www. cars. com/go/index. jsp? aff=national http: //www. leasecompare. com/

Car- Lease v. s Buy