Question 1. You hit the jackpot! You are lucky enough to have enough cash to afford a 2015 Bentley Flying Spur V8!!! The MSRP on the vehicle is a mere $214,295. Your credit is good, so you will get the best interest rate available which is 3.16 on a 5 year loan and 2.19 on a 3 year loan.
a. How much is your monthly payment if you finance all of the amount over 60 months if you live in NJ at a sales tax rate of 7% (remember that you have to pay sales tax for items we buy)
b. How much are you paying for this $214,295 car at the end of 60 months? (hint: add the $214,295 + the total interest + sales tax - to do that take the payment times 60)
c. How much is your monthly payment if you finance over 36 months?
d. How much are you paying for this $214,295car at the end of 36 months?
Question 2.
Now you realize that you may not want an expensive car payment after all. You see the same Bentley Flying Spur V8 leased in the 5/26/15 Philadelphia Inquirer for only $2,477 a month. This great payment requires you to put $5,000 down and the lease runs for 36 months. Total payments will be $91,718.25. You must also pay $379 for a documentation fee but your $5,000 down payment does indeed include the bank fees or $995 and a $1,527.33 cap cost reduction plus of course the $2,477 first month payment. If you want to purchase the car at the end it has a residual of $117,862.25. And as a side note, the amount of miles you can drive this car is 2500 a year, any miles over are $1.50 a mile (see the advertisement above if you can read the fine print) (5 points total)
a. The money factor is .00076. To get an interest rate this factor is multiplied by 2400. What is the interest rate?
b. How much is your cost - total cost - to ‘borrow' this car for 36 months
c. Look at the data from a website and analyze - which is better, to buy or lease the car (use the calculator buy vs. lease). WHY???
3. What did you learn from the Cars week that you can apply either now or in your future when thinking of transportation requirements?