# what are the pros and cons of owning a vehicle? pros cons

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• Slide 1
• What are the pros and cons of owning a vehicle? Pros Cons
• Slide 2
• Unit 8 - Finance
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• Slide 4
• Things to consider when buying a car:
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• Example 1: Finance a vehicle You are purchasing a used car and need to borrow \$5000 from the bank for four years at 9.5% interest, compounded monthly. a) Calculate the total amount paid to the bank for the loan. b) Calculate the total amount of interest paid over the life of the loan.
• Slide 9
• a) Calculate the total amount paid to the bank for the loan. A=P(1+i) n A=? P=\$5,000, i=0.095/12, n=4x12=48 A=\$5,000(1+0.095/12)48 A=\$7,300.49
• Slide 10
• b) Calculate the total amount of interest paid over the life of the loan. I=A-P A=\$7,300.49, P=\$5,000 I=\$7,300.49-5,000 I=2,300.49 The total interest is \$2,300.49
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• Example 2: Lease a new Vehicle To lease a new car selling for \$30 000, a customer agrees to pay a \$2000 down payment and to make 48 monthly payments of \$445. a) Calculate the total cost of leasing the vehicle b) Calculate the average cost per month over the life of the lease.
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• a) Calculate the total cost of leasing the vehicle Total cost = down payment + monthly payments = 2000 + (48 x 445) = 2000 + 21 360 = 23 360 Therefore, the total cost of leasing the car for four years will be \$23,360.
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• b) Calculate the average cost per month over the life of the lease. \$23,360 48months = \$486.67/month The average cost per month is \$486.67
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• Classwork / Homework P486 #3-5, 7, 9
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• Things to consider when buying a car: How much can you afford? Payment options (cash, finance, lease) What type of vehicle (sporty, sedan, SUV)? Automatic/Manual? Passengers? Cargo? How far driving? City or highway? (fuel efficiency, reliability) New or used? Insurance (age of owner, type of vehicle, sex, marital status, purpose, distance, driving record, previous claims)
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• Buying a New vehicle Advantages Disadvantages No wear and tear No previous drivers Warrant Desired options Expensive Warrant may not cover all problems Depreciation greatest in first few years Manufacturing defects
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• Buying a used car Advantages Disadvantages Lower cost Less depreciation Used-car warranty Hidden mechanical problems May be poorly maintained No warranty if buying from a private seller after new-car warranty expires
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• Leasing instead of buying Advantages Disadvantages Driving a new vehicle Low down payment Lower monthly payments Can drive a car that you might not be able to afford to buy Cost of additional mileage over limit Higher overall cost in long run Will not own car at end of lease Confusing contracts