Question

Buy Versus Lease Amanda Forsythe of Springfield, Missouri, must decide whether to buy or lease a car she has selected. She has negotiated a purchase price (gross capitalized cost) of $35,000 and could borrow the money to buy from her credit union by putting $2,600 down and paying $775.86 per month for 48 months at 7 percent APR. Alternatively, she could lease the car for 48 months at $510 per month by paying a $2,600 capitalized cost reduction and a $350 disposition fee on the car, which is projected to have a residual value of $12,800 at the end of the lease. Use the Run the Numbers worksheet to advise Amanda about whether she should finance or lease the car. Round your answers to the nearest cent.

Finance charges (borrowing the car): $

The dollar cost of leasing: $

Amanda should finance or lease the car?

Answer 1