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Team 2

Team 2. Vinh Thu Lieu – Organizer Qi Xu – Summarizer Manuel Gutierrez – Techie. Scenarios. Buying Vs. Leasing a Vehicle . BMW 3-Series 325Ci Convertible Good Entry Level Sport Car Reliable Good Resale Value (approx. <= 70% ) Depending on the Used Cars

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Team 2

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  1. Team 2 Vinh Thu Lieu – Organizer Qi Xu – Summarizer Manuel Gutierrez – Techie

  2. Scenarios Buying Vs. Leasing a Vehicle. • BMW 3-Series 325Ci Convertible • Good Entry Level Sport Car • Reliable • Good Resale Value (approx. <= 70% ) Depending on the Used Cars • Comfortable and Great Looking Car • MSRP: = $40,295 • Selling Price: = $36,750 What should he do?

  3. Course of Action 1 • Buying a Car: • Down Payment: $2500 • Excellent Credit: ARP at 6.65% - 3 Year fixed APR Performance Loan • Monthly Payment: $1139

  4. Course of Action 2 • Leasing a Car: • Annual mileage: 12,000 miles/year - 3 Year Terms • Down Payment: $2500 • Monthly Payment: $494

  5. S = $0 S =$24177 n = 36 A = $494 n = 36 $ 2500 A = $1139 $ 2500 Annual Worth Analysis BMW 3-Series 325Ci Convertible Buy Cash Flow Diagram Lease Cash Flow Diagram

  6. Sensitivity Analysis • Varies Down Payment • Varies the Financial Period (Terms) • Over Mileages Cost • Buying vs. Leasing

  7. Down Payment Analysis

  8. Financial Period and Mileage Analysis

  9. Decision • Down payment: $2500 (Selling Price: $36750) • 3 years financing • Keep the Car Total Cost: $40,999.10 (Buy) Total Cost: $42,763.70 (Lease) • Don’t Keep the Car Total Cost: $14924.22 (Buy) Total Cost: $17780.80 (Lease) • Difference: $2856.60 • Buying is the best choice here

  10. Advantages and Disadvantages of Buying • Advantages: can modify your car in whatever manner you choose , there are no mileage restrictions, You can drive as many miles, you have the flexibility of selling the car whenever you want • Disadvantages: As warranty expires and you experience mechanical problems with the vehicle, you're responsible for the repair costs. As vehicle gets older, you can expect to incur repair and maintenance costs , Cars depreciate in value while depleting your liquid cash in the process

  11. Advantages and Disadvantages of Leasing • Advantages: leasing provides an opportunity for people to drive more expensive vehicles for less money each month, leasing allows consumers to drive a new vehicle every few years, Leasing helps consumers avoid the hassles often associated with selling their used car to an independent third party or trading in their vehicle to a local dealer • Disadvantages: most vehicle leasing programs have a yearly mileage limit, leased vehicles usually require higher insurance limits, Lease contracts can be difficult

  12. Resources • http://www.nada.com/ ( Vehicles pricing, Tip and advising about lease vs. buy ) • www.bmwusa.com ( vehicles about the chosen car ) • http://forums.mwerks.com/zerothread?cmd=print&id=794813 ( formula for lease ) • Text Books (Present Worth Analysis)

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