Calculate the cost of leasing each of the vehicles described below assuming the security deposit was not returned.

a.  $2500 down payment

     $400 refundable security deposit

     60 monthly payments of $324.99

      HST (13%) on each monthly payment

     Allowable usage: 90000 km; actual usage 106584 km.  $0.13/km surcharge

1.    a) Why would someone decide to purchase a vehicle with a long term loan? (2 marks)

b) What are some of the pitfalls/risks associated with these loans?


2.    Based on your 'Borrowing Options' research: Which option would you chose to purchase a vehicle? Explain. (3 marks)

b.  $500 down payment

     $200 refundable security deposit

     24 monthly payments of $156.00

      HST (13%) on each monthly payment

     Allowable usage: 40000 km; actual usage 51759 km.  $0.20/km surcharge