6.8
Dec 22, 2015
Formulas:• Total # of monthly payments x Amount paid
per month = Total amount of monthly payments
• Total amount of monthly payments + Down Payment = Total Paid
• Total Paid – Delivered Price = Finance Charge
The delivered price of Josh’s car is $23,560. He makes a $2,000 down payment. He pays 48 monthly payments of $560. What is the amount Josh paid for his car? What was the finance charge?
What is the amount Josh paid for his car?
48 x $560 = $26,880
$26,880 + $2,000 = $28,880 (total paid)
Steve bought a used truck for $9,650. He paid a $2,650 down payment. He also paid 36 monthly payments of $234.30. What is the amount Josh paid for his car?
36 x $234.30 = $8,434.80
$8,434.80 + $2,650 = $11,084.80
Brit bought a new car for $47,851. He paid a $4,500 down payment. He also paid 60 monthly payments of $805.47. What is the finance charge on the car?
60 x $805.47 = $48,328.20
$48,328.20 + $4,500 = $52,828.20
$52,828.20-$47,851 = $4,977.20
Lease Contract Lease Price Residual Value Interest Rate Lease Term Security Deposit Loan Fee Registration Fees Mileage Allowed
James leased a car at $307/ month for 48 months and a down payment of $995. At the end of the lease he had to pay $0.22 for the 2,800 miles over the limit. What were his total lease costs?
48 x $307 = $14,736 (total lease payments)
$0.22 X 2,800 = $616 (excess miles charge)
$14,736 + $616 + $995 = $16,347 (total lease costs)
Candy has a 2-year car lease with $528 monthly payments. Mileage limit was 12,000 miles per year. She is charged 20 cents for every mile over the limit. Her total miles for the 2 years was 30,850 miles. What was the total cost of the lease over the 2-years?
$528 x 12 x 2 = $12,672 lease payments
30,850 – (12,000 x 2) = 6,850 excess miles
6,850 x $0.20 = $1,370 excess mile charge
$12,672 + $1,370 = $14,042 total costs
Terry has a 4-year car lease with $332 monthly payments. Mileage limit was 12,000 miles per year. He bought 3,000 extra miles each year for 7 cents per mile. Lease processing fees and down payment totaled $418. What was the total cost of the lease over the 4-years?
$332 x 12 x 4 = $15,936 lease payments
4 x 3,000 = 12,000 miles purchased 12,000 x $0.07 = $840 extra miles
$15,936 + $840 + 418 = $17,194 total costs
Will and his dealer negotiated a price of $27,400 for a new car. Will can lease this car for $496 a month for 36 months. Option to buy it at the end of the lease for the residual value of $16,200. If he buys the car now his monthly payment is $822 for 3 years after paying a $2,000 down payment. What is the total cost of purchasing the car either way? Which plan costs less?
Lease:• 36 x $496 = $17,856 (Total lease payments)• $17,856 + $16,200 = $34,056 (Total cost to
purchase leased car) Buy:
• 36 x $822 = $29,592 (Total monthly payments)
• $29,592 + $2,000 = $31,592 ( Total cost to purchase car out right)
Buying is cheaper! • $34,056 – 31,592 = $2,494 (Difference)
Car costs $18,500. Can be leased for $436/ month with $500 down payment and residual value of $11,000. To purchase the car the monthly payment would be $728 with a $3,100 down payment. The terms are 24 months. Which is less expensive, leasing or buying and by how much?
Lease:• 24x $436 = $10,464 (Total lease payments)• $10,464 + $500 +$11,000 = $21,964 (Total
cost to purchase leased car) Buy:
• 24 x $728 = $17,472 (Total monthly payments)
• $17,472 + $3,100 = $20,572 ( Total cost to purchase car out right)
Buying is cheaper! • $21,964 – 20,572= $1,392 (Difference)
Car costs $37,960. Can be leased for $623/ month with $995 down payment and residual value of $19,050. To purchase the car the monthly payment would be $873 with a $3,800 down payment. The terms are 4 years. Which is less expensive, leasing or buying and by how much?
Lease:• 4 x 12 x $623 = $29,904 (Total lease
payments)• $29,904+ $995+$19,050 = $49,949 (Total
cost to purchase leased car) Buy:
• 4 x 12 x $873 = $41,904 (Total monthly payments)
• $41,904 + $3,800 = $45,704 ( Total cost to purchase car out right)
Buying is cheaper! • $49,949– 45,704= $4,245 (Difference)
Annual expenses for using the car…• Insurance• Gas• Oil• License and Inspection Fees• Tires• Repairs• Garage rent• General Upkeep
Gerri paid $18,700 for her car. Insurance, gas, oil, and other expenses are $2,300. The car depreciates 16% per year. She could earn $145 interest on her investment. What was her operating costs on her car for the year?
Annual Deprecitaion• 16% x $18,700 = $2,992
Annual Cost of Car Operation• $2,992 + $2,300 + $145 = $5,437
Conrad purchased a used car $12,480. His expenses were: gas and oil $1,070; repairs $512; Insurance $981; license plates $83; Loss of interest on investment $561; Depreciation 12%. Find the total operating expense in year one. (Round to nearest $)
Find the total operating expense in year one. (Round to nearest $)
12% x $12,480 = $1,497.60
$1,497.60 + $1070 + $512 + $981 + $83 + $561 = $4,704.60 -- $4,705
Jess bought an old car for $600. The expenses she paid this year include: gas $610; Maintenance and repairs $780; Property damage and liability insurance $630; License plates $63; Depreciation 10%; Lost interest $15. What is the annual cost of this car?