Leasing vs. Buying a Car

Question 11 • 26-27 Ignite Technical Math-Financial Math - MA2007

The depreciation component of a lease payment is _____.

Answer

to compensate the leasing company for the monetary value the car loses during your lease

interest you pay on the money the lease company has invested in your car during your lease

the sum of your first and final lease payments, designed to make driving the car off the lot more affordable

an additional amount added to the value of the car to say “thank you” to the lease company for their services

Explanation

The depreciation component covers the car’s loss in value while you lease it. It is generally based on the difference between the car’s value at the start of the lease and its expected value at the end. Choice A correctly describes this as compensation for the monetary value the car loses during your lease.

AI-written and checked against the verified answer.

More from this Course

Financing a Car

Applying for a Loan

Financing a Car