LEASE OPTION: Leasing a Vehicle When you lease a velricle, you only pay sales tax on the lease payments, not on the entire cost of the vehicle. If a down paynie is made for a lease, sales tax is also applied to it. LEASE BUYOUT INFORMATION The buyout value (or residual value) of a vehicle is usually: - 60% on a 2-year lease - 45% on a 4 -ycar lease - 53% on a 3-year lease - 37% on a 5 -year lease Ex. A $20,000 car has a buyout value of 0.45$20,000=$9,000 after a 4-year lease. The interest rate on a lease increases with the length of the lease; for example, on a 2 -year lease, the interest rate may be 1.99% and on a 5 -year lease, the interest rate may be 4.99%. IF you are leasing a used vehicle, these interest rates increase by 0.50% because the manufacturer's warranty may have expired or there may not be incentive/competitive interest rates for the used vehicle. Interest rates also often dependent on other financial conditions at the time such as the prime interest rate. Assume you buy the car at the end of the lease. Calculate the total amount paid for the lease and the buyout by following the procedure. 1. The buyout value (listed earlier): The bugpont value is 9,000 2. The sales tax on the down payment: 3. The amount the lease is for (list price - buyout value - down payment): 4. The monthly payment (Present Value Formula): 5. The sales tax on a monthly payment: 6. The total amount paid for the lease and the buyout: Part C: Other Costs of Operating a Vehicle In this section, we will use the car you selected in Part B to estimate the cost of operating that velicle over 2,3,4, or 5 years, epending on the term you choose or the term for the default vehicle. Complete this section to estimate the ongoing operating costs of a vehicle with the following values. 1. Insurance: Calculate the cost of insurance over the lease/financing term at a rate of $155 per month. 2. Fuel Cost: Estimate the cost over the lease/financing term with the following values: - 25,000km driven in a year. - The car uses 7L of fuel per 100km driven. - An average fuel price of $1.69/L. 3. Maintenance Costs: Using the following table to calculate maintenance costs over the lease/financing term of your vehicle. LEASE OPTION: Leasing a Vehicle When you lease a velricle, you only pay sales tax on the lease payments, not on the entire cost of the vehicle. If a down paynie is made for a lease, sales tax is also applied to it. LEASE BUYOUT INFORMATION The buyout value (or residual value) of a vehicle is usually: - 60% on a 2-year lease - 45% on a 4 -ycar lease - 53% on a 3-year lease - 37% on a 5 -year lease Ex. A $20,000 car has a buyout value of 0.45$20,000=$9,000 after a 4-year lease. The interest rate on a lease increases with the length of the lease; for example, on a 2 -year lease, the interest rate may be 1.99% and on a 5 -year lease, the interest rate may be 4.99%. IF you are leasing a used vehicle, these interest rates increase by 0.50% because the manufacturer's warranty may have expired or there may not be incentive/competitive interest rates for the used vehicle. Interest rates also often dependent on other financial conditions at the time such as the prime interest rate. Assume you buy the car at the end of the lease. Calculate the total amount paid for the lease and the buyout by following the procedure. 1. The buyout value (listed earlier): The bugpont value is 9,000 2. The sales tax on the down payment: 3. The amount the lease is for (list price - buyout value - down payment): 4. The monthly payment (Present Value Formula): 5. The sales tax on a monthly payment: 6. The total amount paid for the lease and the buyout: Part C: Other Costs of Operating a Vehicle In this section, we will use the car you selected in Part B to estimate the cost of operating that velicle over 2,3,4, or 5 years, epending on the term you choose or the term for the default vehicle. Complete this section to estimate the ongoing operating costs of a vehicle with the following values. 1. Insurance: Calculate the cost of insurance over the lease/financing term at a rate of $155 per month. 2. Fuel Cost: Estimate the cost over the lease/financing term with the following values: - 25,000km driven in a year. - The car uses 7L of fuel per 100km driven. - An average fuel price of $1.69/L. 3. Maintenance Costs: Using the following table to calculate maintenance costs over the lease/financing term of your vehicle