E Math 11 WS 3-3 Buying and Leasing a Vehicle

E Math 11 WS 3-3 Buying and Leasing a Vehicle

·  Purpose = solve problems involving the acquisition and operation of a vehicle, including

o  renting

o  leasing

o  buying

o  licensing

o  insuring

o  operating (e.g., fuel and oil)

o  maintaining (e.g., repairs, tune-ups).

Procedure: we will use a computer and the internet to find all the information we need to operate a motor vehicle.

Part B: Leasing a Vehicle & Part C: Buying a Car (New)

Directions: Log on to the internet as in the renting section (WS 3-2) you completed earlier. We are all going to do the same vehicles for the first two exercises, then you will choose a vehicle. Use your dreams and imagination for the last car.

Vehicle 1: Toyota Tundra Regular Cab V-8 4x4

1.  Go to www.toyota.ca

2.  Click on “English” and “Enter Site”

3.  Go to “Vehicles”

4.  Go “Tacoma”

Your web page should look like this.

5. Go to “Price Your Toyota”

6. Price your Tacoma.

7. Price your Toyota by

Province > Choose “BC”

8. Select your model of vehicle:

Click on “Tacoma”

9. Click on “Next Step”.

10. Select 2008 model year.

11. Select Model: “4x4 Double Cab V-6”

12. Select Automatic transmission.

13. Click on “Taxes, Levies, Fees, Freight & Delivery”

14. Change the lease time from 48 months to 60 months

15. Now record the following information from the boxes on the screen:

List Interest Rate Term in Months Monthly Payment

Lease

Purchase

Lease list price does not include taxes. The taxes are added later automatically into the monthly payment.

16. What is the cost of the vehicle for leasing (leasing is a fancy name for renting). Let’s do the math for leasing this vehicle for 5 years.

a) How many months in 5 years? ______months

Now since we are leasing for 5 years, we will make lease payments for 5 years.

b) Lease: number of months (____) X monthly payment. SHOW THE MATH

$______

c) After 5 years of lease payments what do you own? $______

d) Therefore, the cost to lease a vehicle for 5 years is $______

17. What is the cost of purchasing the vehicle. Let’s do the math for purchasing this vehicle over the 5 years.

a) To purchase the vehicle, you only make payments for the length of the loan. Purchase: number of months (60) X monthly payment. SHOW THE MATH

$______

b) We will assume 24,000 km/yr for 5 years = ______km

c) According to black book values, this truck in good condition will be worth $16,000 with the mileage (as in b above) in 5 years, so after all those payments what do you own? $______

d) The cost of purchasing a vehicle and driving it for 5 years is:

Payment cost (answer form 17a) :$______

Subtract

Blue book value after 5 years: $______

Cost of ownership: $______

e) If you sell or trade your car in, do you think there is a penalty? ______

*In fact you can trade in or sell your vehicle any time and there is no penalty (Car loans can be paid off any time – no penalty.

*Leasing, however, when you turn the vehicle in you pay for anything beyond what the dealer deems as normal wear and tear (parking lot dings, carpet stains, alterations to the body, excessive mileage, etc.), the leaser pays for restoration or a penalty.

*When you purchase a car, you have bargaining power and you can haggle over the price and have things included in the purchase for free (i.e. floor mats, undercoating, upgrade in stereo, etc). When you lease you pay the lease payment. The buyout at the end of the lease is not negotiable.

*Why do dealers prefer leases?

1. no haggle on pricing

2. leasers often upgrade to a more expensive vehicle (higher payments)

3. more people can afford to lease because of the lower payments (but remember, they never end because you are only renting) so more cars are leased.

4. If the car has excess mileage, or wear (carpet stain, fabric rip, small dent) when the lease has expired, these are points of leverage for the dealer to either charge you or have you start a new lease with them.

5. If you cancel the lease, you pay a penalty

18. To summarize Toyota Tacoma:

Over 5 years:

a) Cost of Leasing = $______b) Cost of ownership:$______

Vehicle 2: Mazda 3

1. Go to www.mazda.ca

2. Click on “Welcome”

3. Select “Mazda 3 ” because you are a sporty type of person (you can go to the vans later).

4. Go to “Build your Vehicle”

5. Select “GT with Luxury Package”.

6. Click on “ Step 2”

7. Choose these three accessories. The price of the car increases automatically.

*There are many other accessories and car models. You can play around later.

8. Select the province of BC

9. Click on “Step 3”

10. Extended warranties are generally not necessary. If you are not sure about the reliability of the car then don’t buy it.

Click on “Step 4”

11.  Assume no down payment and no trade in. (You’re young and pizza is a must-have).

I have blocked out some of the numbers so you have to get them yourself.

12.  What is the “total vehicle price”? $______

13.  What is the “purchase price” after PDE and taxes? $______

14.  Assume 48 month finance and lease periods.

Fill in these 5 boxes.

Months Finance Monthly Payment Months Lease (ALR) Monthly Payment Lease-End Value

48 48

15. What is the cost of the vehicle for leasing the Mazda 3. Let’s do the math for leasing this vehicle for 4 years.

a) How many months in 4 years? ______months

Now since we are leasing for 4 years, we will make lease payments for 4 years.

b) What is monthly lease payment with taxes? $______/month

c) number of months (____) X monthly payment.

SHOW THE MATH

$______

d) After 4 years of lease payments what do you own? $______

e) The cost to lease a vehicle for 4 years is $______

16. What is the cost of purchasing the Mazda 3. Let’s do the math for purchasing this vehicle for 4 years.

a) To purchase the vehicle, you only make payments for the length of the loan. Purchase: number of months (48) X monthly payment. SHOW THE MATH. The monthly payment includes all the taxes.

$______

b) We will assume 20,000 km/yr for 4 years = ______km

c) According to black book values, this car in good condition will be worth $17,000 with the mileage (as in b above) in 4 years, so after all those payments what do you own? $______

d) The cost of purchasing a vehicle and driving it for 4 years is:

Payment cost (answer form 14a) :$______

Subtract

Blue book value after 4 years: $______

=

Cost of ownership: $______

e) If you sell or trade your car in, do you think there is a penalty? ______

*In fact you can trade in or sell your vehicle any time and there is no penalty (Car loans can be paid off any time – no penalty.

*Leasing, however, when you turn the vehicle in you pay for anything beyond what the dealer deems as normal wear and tear (parking lot dings, carpet stains, alterations to the body, excessive mileage, etc.), the leaser pays for restoration or a penalty.

Business tax write-offs:

Own car: depreciation, parts, maintenance

Lease car: lease payments, parts, maintenance

17. Over 4 years Mazda 3:

a) Cost of Leasing = $______b) Cost of ownership:$______

Vehicle 3: You choose the car (9 bonus marks)

1.  Name of car: ______

2.  Manufacturer: ______

3.  Model: ______

4.  Year: ______

5.  Price (before taxes) :$______

6.  Price after taxes: $______

7.  Monthly payment (go to the website below or google for “loan calculator” determine your payments). Make a print out of the site after you have entered all the data.

8.  Monthly payment: $______

9.  Total cost of purchasing the car is: Monthly payment x term of loan (months)

Show work!

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