Leasing vs Buying a Car with Loan

Activity Description

In this worksheet, students will compare the financial implications of leasing a car versus buying a car with a loan. They will analyze the costs associated with both options for a Toyota Camry over a period of 36 months. By estimating the total cost of leasing and calculating the total cost of buying a car with a loan, students will gain insights into which option may be more financially advantageous.

Activities:

• Introduction to Leasing vs. Buying: Students will receive an overview of the key differences between leasing a car and buying a car with a loan. Students will be provided with the lease details of a Toyota Camry, including the monthly lease payment, due at signing, and lease duration of 36 months.
• Lease Cost Calculation: Students will estimate the total cost of leasing the car for 36 months by multiplying the monthly lease payment by 36 and adding the due at signing amount.
• Loan Cost Calculation: Students will use a loan calculator to determine the total cost of buying the car with a loan. They will deduct the down payment (equal to the due at signing for the lease) from the car price to get the loan amount, use the slider to choose the loan duration and calculate the monthly loan payment, calculate the total loan payments over the selected duration.
• Resale Value Analysis: Students will calculate the total cost of car ownership if the car is sold after 36 months at 60% resale value. They will consider the remaining loan balance and the resale value to determine the net cost.
• Comparison and Profit Calculation: Students will compare the total cost of leasing versus buying and find the loan duration that results in a profit compared to leasing.

Key Learning Outcomes:

• Financial Comparison Skills: Students will develop skills in comparing the financial aspects of leasing versus buying a car.
• Cost Estimation and Calculation: Students will learn to estimate leasing costs and calculate loan costs, including the impact of down payments and resale value.
• Informed Decision-Making: This worksheet will help students make informed decisions about car financing options based on their financial goals and circumstances.

Learning Objective

Students will read and analyze a car lease agreement, and answer some lease-related questions. Additionally, students will apply their understanding by calculating the total repayment amount for a car loan with a down payment equal to the lease signing amount, covering the same duration as the lease. Finally, they will conduct a comparative analysis between the lease and loan options.

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