TT 22 - Lease versus Buy Analysis Personal Finance: Another Perspective Purpose: The purpose of this spreadsheet is to give an Excel

template for calculating the cost of leasing versus buying. The lease cost is an approximation only, and is close but not exact. This spreadsheet is only a help in discussing the financial aspects as part of the lease versus buy analysis, and assumes you can sell the vehicle at the end of the term for the pre-determined residual value. Disclosure: The purpose of this spreadsheet and this class is to help you get your financial house in order and to help you on your road to financial self-reliance. If there are mistakes in this spreadsheet, please bring them to our attention and we will correct them in upcoming versions. The teacher, and BYU, specifically disclaim any liability, or responsibility for claims, loss, or risk incurred, directly or indirectly, from using this material.

TT 22 - Lease versus Buy Analysis

Personal Finance: Another Perspective

This tool helps to compare leasing versus buying as a potential method of acquiring a vehicle. It is for educational purposes only. The lease close approximation. Please note that this example assumes that taxes are paid outside of the monthly lease payments and that the taxes on do outside the monthly lease or loan payments as well. Costs Finance Charges and Residual MSRP 25,000.00 Interest Rate (rent charge) 8.35% Capitalized or Negotiated Cost 22,000.00 Sales Tax 6.25% Cap. Cost Reduction (Down Payment) 2,000.00 Lease Period (months) 36 Cap. Cost Reduction (Trade in) Residual Value in % 55% Remaining Amount (Net Capitalized Cost) 20,000.00 Residual Value in $ 13,750.00 Trade In Allowance Balance Owed on Trade In Lease Analysis (Fees paid separately) Buy Analysis (Down Payment paid separately) Overall Monthly Overall Monthly Costs: Cost Payments Costs: Cost Payments Capitalized Cost $ 22,000.00 Negotiated Cost $ 22,000.00 Down payment 2,000.00 Down payment 2,000.00 Net Balance on Trade-In Net Balance on Trade-In Taxable Fees/Options Taxable Fees/Options Net Taxable Amount 20,000.00 Tax on Down Payment 125.00 Tax on Down Payment 125.00 Fees: Acquisition 500.00 Termination 300.00 Documentation/Inspection 200.00 License & Registration 185.00 Property Assessment /State Fees Other Fees Total Paid Outside Lease 3,310.00 Total Amount to Finance: 20,000.00 Fees: Acquisition Termination Documentation/Inspection 200.00 License & Registration 185.00 Property Assessment /State Fees Total Paid Outside Loan Total Amount to Finance: Taxes on Net Amount Total Amount to Finance Loan Payments: PV = 21250., I = 6.25% N = 36 PMT = ? 2,510.00 20,000.00 1,250.00 21,250.00

Lease Payments: Depreciation: (NCC-RV) Interest (NCC+RV)*MF Taxes Total Lease Costs Total Costs Less Residual Value Total Lease Payments:

6,250.00 4,227.19 654.82 11,132.01 14,442.01

173.61 117.42 18.19

24,096.03

669.33

Total Costs Less Residual Value 309.22 Total Payments:

26,606.03 (13,750.00) $ 12,856.03 669.33

$ 14,442.01

1. Interest charges are calculated by adding the capitalized cost plus residual value times the money factor, which is the interest rate in decim It can also be thought of as the average amount outstanding, or (remaining amount + residual value) / 2 times the average interest rate of A it is the remaining amount plus residual value * APR / 24 or the Money Factor. Amount from Lease Contract APR

Actual Monthly Rent Charge in Dollars Actual Annual Rent Charge in Dollars

212.77 7,659.90

15.13% 15.13%

Analysis

spective

or educational purposes only. The lease interest charge is a y lease payments and that the taxes on down payment are paid Fees Acquisition 500.00 Termination 300.00 Documentation/Inspection 200.00 License & Registration 185.00 Property Assessment /State Fees Taxable Fees Other Taxable Fees/Options Buy Analysis (Downpayment & Fees Paid Separately) Overall Monthly Costs: Cost Payments Negotiated Cost $ 22,000.00 Total Payment 2,000.00 Net Balance on Trade-In Taxable Fees/Options Net Taxable Amount 20,000.00 Tax on Vehicle 1,250.00 Fees: Acquisition Termination Documentation/Inspection 200.00 License & Registration 185.00 Property Assessment /State Fees Total Paid Outside Loan Total Amount to Finance: Total Credits Total Amount to Finance Loan Payments: PV = 21250., I = 6.25% N = 36 PMT = ? 2,385.00 21,250.00 21,250.00

24,096.03

669.33

Total Costs Less Residual Value Total Payments:

26,481.03 (13,750.00) $ 12,731.03 669.33

actor, which is the interest rate in decimal form divided by 24. e) / 2 times the average interest rate of APR / 12. Multiplied out,