Lease vs. Buy Assignment
Table of Contents:
Introduction……………………………………………………………………………1
Leasing vs. Buying a Car………………………………………………………………2
Advantages………………………………………………………………………….….4
Disadvantages…………………………………………………………………..………5
Present Value…………………………………………………………………………...5
Analysis Illustrations……………………………………………………………………6
Conclusion………………………………………………………………………………7
References……………………………………………………………………………....9
The purchase of an automobile is a very important financial transaction one can make. Not only is a car an expensive purchase, it also comes with a cost of maintenance, repair, and once it is driven off the dealers lot, the vehicle becomes an investment that readily depreciates in value. Most buyer looking to purchase a new vehicle must consider a number of issues such as, whether to trade in a current vehicle, how much is the current trade-in worth, and lease or buy options. This paper will examined and analyzed the advantage and disadvantages of the lease vs. buying an automobile.
Leasing vs. Buying a Car
There are many pitfalls that today’s consumer must maneuver when contemplating on a financially large purchase. Many must decided if a leasing a car over buying a car will benefit them or their families in the long run. Factor such as, “budget constraints may influence make or buy decisions. If a buy decision is to be made, then a further decision of whether to purchase or lease is also to be made”(PMBOK, 2013, p 365). At first thought the choice between the two alternative lease or buy would seem relatively simple. “If the net present value of the lease is greater than the net present value of the purchase option, than car should be leased and vice versa. But such a decision without comparing present values may be wrong .(Mohajan, 2012, p. 146). There are many complications that exist when attempting to lease a car. Leasing a car can be very complicating. When a consumer purchases a car it is a straight forward transaction. The base car
Introduction……………………………………………………………………………1
Leasing vs. Buying a Car………………………………………………………………2
Advantages………………………………………………………………………….….4
Disadvantages…………………………………………………………………..………5
Present Value…………………………………………………………………………...5
Analysis Illustrations……………………………………………………………………6
Conclusion………………………………………………………………………………7
References……………………………………………………………………………....9
The purchase of an automobile is a very important financial transaction one can make. Not only is a car an expensive purchase, it also comes with a cost of maintenance, repair, and once it is driven off the dealers lot, the vehicle becomes an investment that readily depreciates in value. Most buyer looking to purchase a new vehicle must consider a number of issues such as, whether to trade in a current vehicle, how much is the current trade-in worth, and lease or buy options. This paper will examined and analyzed the advantage and disadvantages of the lease vs. buying an automobile.
Leasing vs. Buying a Car
There are many pitfalls that today’s consumer must maneuver when contemplating on a financially large purchase. Many must decided if a leasing a car over buying a car will benefit them or their families in the long run. Factor such as, “budget constraints may influence make or buy decisions. If a buy decision is to be made, then a further decision of whether to purchase or lease is also to be made”(PMBOK, 2013, p 365). At first thought the choice between the two alternative lease or buy would seem relatively simple. “If the net present value of the lease is greater than the net present value of the purchase option, than car should be leased and vice versa. But such a decision without comparing present values may be wrong .(Mohajan, 2012, p. 146). There are many complications that exist when attempting to lease a car. Leasing a car can be very complicating. When a consumer purchases a car it is a straight forward transaction. The base car
References: Dasgupta, S., Siddarth, S., & Silva-Risso, J., (2003). Lease or Buy? A Structural Model of the Vehicle Acquisition Decision. Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.198.6979 Dumler, T., Edwards, R., McCorkle, D., & Williams, J., (1999). Leasing vs. Buying Farm Machinery. Retrieved from http://eds.b.ebscohost.com.ezproxy.umuc.edu Haradhan Kumar, M. (2012). RELATION BETWEEN LEASE FINANCE AND PURCHASE. International Journal Of Economics And Research, (03), 144. Levy, G. M. (1992). PURCHASE VS. LEASE OF AN AUTOMOBILE. Journal Of Accountancy, 173(3), 35-39 Price R. Steven. (2003). Lease--Versus –Buy. Retrieved from http://tychousa9.umuc.edu/PMAN650/1402/9041 Project Management Institute (PMI). (2013). A Guide to the Project Management Body of Knowledge (PMBOK guide) (5th Ed.). Newtown Square, PA