LEASING A VEHICLE

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To LEASE a vehicle means:

* pay a SET AMOUNT each month, for a pre­determined length of time.

* you have the option of "PURCHASING" the vehicle at the end of the lease or leasing again.

If you do choose to purchase the vehicle at the end of the lease, you have to pay something called the RESIDUAL VALUE of the vehicle, which is the PREDICTED VALUE of the vehicle at the end of the lease.

KEY TERMS

LEASE TERM: The length of the lease, usually in months.

LEASE PAYMENT: The monthly payment for a lease, which is taxable.

SECURITY DEPOSIT: An initial amount that you pay at the start of a lease and is returned at the end if there is no damage to the car.

ADVANTAGES: DISADVANTAGES:

EX A new Escalade in MB runs about $42,900. (including freight) plus taxes. The monthly lease payment is $382 plus taxes for a 36­month lease. For leasing, a down payment of $4,200 is required. As well a refundable $750 security deposit and first months payment must be made at the start when the lease is signed. The residualvalue is 75%, plus taxes, at the end of the lease if you want to purchase it.

a) Find the total monthly lease payment including taxes.

b) Calculate the total lease payment.

c) Calculate the amount which must be paid at the start of the lease.

d) Find the residual value of the vehicle at the end of the lease.

e) If you bought the Escalade after the lease, what is the total price you would have paid for it from start to finish?

HOMEWORKpg.187; #4­7