Lesson 4 P6 Leasing a Vehicle 2014.notebook

Lesson 4 P6 Leasing a Vehicle 2014.notebook
February 13, 2014
Targeted Learning Outcome
It is expected that you will be able to:Solve problems that involve the acquisition of a vehicle, when leasing.
By the end of this learning experience, you can demonstrate that you have met this outcome by being able to:
• Describe and explain options for leasing or leasing to buy a vehicle.
• Determine costs associated with leasing or leasing to buy a new vehicle.
• Solve, with or without technology, problems that involve a lease, or lease to purchase of a vehicle.
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Lesson 4 P6 Leasing a Vehicle 2014.notebook
February 13, 2014
Lease Agreement
When you lease a vehicle, you pay a monthly leasing fee for a specified number of months. At the end of the specified time period, you can either purchase the vehicle or return it to the dealer. If you decide to purchase the vehicle you will purchase it for the residual value (or lease­
end value). This value is given to you when you lease the vehicle.
When you lease a vehicle, you will be required to sign a lease agreement. This agreement specifies:
• the initial value of the item
• the buy out price at the end of the lease (which is the same as the residual value)
• the down payment (if there is one)
• any additional fees
• the interest rate
• the monthly payment and date due.
The lease agreement will also specify other terms or restrictions, such as what is reasonable use and care of the vehicle. A vehicle lease will usually specify how many kilometres you may drive, and the cost per kilometre if you exceed this limit.
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Lesson 4 P6 Leasing a Vehicle 2014.notebook
February 13, 2014
Advantages of Leasing a Vehicle
­ drive newer vehicle
­ payments are less than loan payments
­ vehicle should always be under warranty
­ you pay taxes on the lease payment, not the total value of the vehicle
­ if you don't like vehicle you can change***
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Lesson 4 P6 Leasing a Vehicle 2014.notebook
February 13, 2014
Disadvantages of Leasing a Vehicle
­ you don't own the vehicle
­ You have a limited amount of mileage before you pay extra costs.
­ you have to pay for damages when you return the vehicle at the end
of the lease. ­ you are committed to the contract you sign when you lease vehicle
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Lesson 4 P6 Leasing a Vehicle 2014.notebook
February 13, 2014
Calculating the Cost to Lease a Vehicle
Example:
A minivan sells for $28 500 and leases for $479 per month plus taxes for a lease term of 24 months. A down payment of $3275 is required. The residual value of the vehicle is 65% of the sales price plus taxes.
a. Calculate the total monthly leasing payment.
b. Calculate the total amount paid by the end of the lease.
c. Calculate the total residual value of the minivan, including taxes.
d. Calculate the total cost of the vehicle if it is purchased outright at the end of the lease.
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Lesson 4 P6 Leasing a Vehicle 2014.notebook
February 13, 2014
Example 2:
Use the same information from the previous example. In this scenario, the minivan is not purchased outright but is financed at the end of lease with a 3 year vehicle loan at an interest rate of 6%. Use the Online Loan Calculator http://www.carloanscanada.com/calculators/canadian­car­loan­calculator/
a. Calculate the monthly payment on the residual value of the minivan.
b. Calculate the total amount paid on the residual value.
c. Calculate the total amount paid for the minivan through the lease and financing of the residual value.
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Lesson 4 P6 Leasing a Vehicle 2014.notebook
February 13, 2014
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Lesson 4 P6 Leasing a Vehicle 2014.notebook
February 13, 2014
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Lesson 4 P6 Leasing a Vehicle 2014.notebook
February 13, 2014
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Lesson 4 P6 Leasing a Vehicle 2014.notebook
February 13, 2014
Answer all questions
on pp. 20 ­ 21
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Attachments
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