Leasing vs. Buying a Car Answers

Ralph is leasing a $32,000 car for 36 months. The terms of his lease include an 8.5% interest rate (money factor of 0.00354) and a residual value of 72%. Determine Ralph’s approximate monthly lease payment.a.$145.00b.$230.40c.$248.89d.$443.73

Bob is thinking about leasing a car with a MSRP of $24,000 for three years. After three years, the leasing company expects the car to have a value of 72% of its original MSRP. What will the residual value of the car be after three years?a.$3,000b.$6,000c.$17,280d.$33,333

Tim needs a new car while he attends college in the United States for the next three years. The car he would like has a MSRP of $15,000. A local dealer can get him a 3-year loan with a 7% interest rate if Tim can give them a $1,500 down payment. The same dealer offers the same car to lease with a money factor of 0.00271 and a residual value of 75%. The lease requires an additional fee of $1,250 to cover Tim’s security deposit and the acquisition and documentation fees for the car. Tim is looking to drive the car home with the smallest initial out-of-pocket cost. Which of the following statements is true?a.The initial out-of-pocket cost is less for the lease.b.The initial out-of-pocket cost is less for the loan. c.The initial out-of-pocket cost is the same for the lease and loan.d.The initial out-of-pocket cost for a lease is not comparable to that of a loan.

Bob is thinking about leasing a car. The lease comes with an interest rate of 8%. Determine the money factor that will be used to calculate Bob’s payment.a.0.00033b.0.00192c.0.00333d.0.01920

One difference between obtaining a car with a lease or a loan is that _____.a.a loan will not have any additional fees or payments that need to be considered while a lease comes with a handful of additional chargesb.a lease will not have any additional fees or payments that need to be considered while a loan comes with a handful of additional chargesc.a loan finances the total purchase price of the car while a lease finances only the depreciated value and related feesd.a loan finances the depreciated value of the car with related fees while a lease finances the total purchase price of the car

Determine the monthly payment for a 36 month lease on a $26,000 car with a residual of 71% and an interest rate of 7.5%.a.$104.87b.$209.44c.$273.08d.$348.38

Which of the following would be a good argument to lease rather than buy?a.“I drive almost twice as much as the average driver.”b.“I prefer the warranty that covers repair costs of a new car.”c.“I’m going to need the car for at least ten years, if it lasts that long.”d.“I am more interested in investing in a car rather than renting one for a long period of time.”

Ralph is leasing a car worth $24,000 for three years. His leasing company says that the car Ralph is leasing will only be worth $16,000 at the end of his lease. Approximately what percentage of the car’s original value will Ralph need to pay as part of his lease?a.8%b.16%c.33%d.67%

Approximate the interest rate for a lease that comes with a money factor of 0.0027.a.0.65%b.1.13%c.6.5%d.11.25%

Leasing a car for a short time is usually cheaper than buying the same car since __________.a.insurance premiums are lower for leased carsb.leasing generally comes with a lower interest ratec.people who lease cars are considered more responsible than those who buyd.in leasing a car you pay only for the depreciation of the car rather than the total value