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Leasing vs. Buying a Car — Quiz Answers

8 verified answers
1
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Cindy has decided to lease a car. The lease includes a money factor of 0.00354 What interest rate is Cindy being charged in her lease?

A
14 point 7 5 percent
B
1 point 4 7 5 percent
C
8 point 5 percent
D
0 point 8 5 percent
2
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Tim needs a new car while he attends college in the United States for the next three years. The car he would like has an MSRP of 15 dollars comma 000 A local dealer can get him a three-year loan with a 7% interest rate if Tim can make a 1 dollars comma 500 down payment. The same dealer offers the same car for lease with a money factor of 0.00271 and a residual value of 75% The lease requires an additional fee of 1 dollars comma 250 to cover Tim's security deposit and the acquisition and documentation fees for the car. Tim is looking to drive the car home with the smallest monthly payment. Which of these statements is true?

A
You cannot compare the monthly payments for leases and loans.
B
The monthly payments for the lease and loan are the same.
C
The monthly payment for the loan is lower.
D
The monthly payment for the lease is lower.
3

Henry is at the end of a three-year lease for his car. His leasing company says that his car is currently worth 12 dollars comma 780 , a 72% residual value. Determine the original MSRP of Henry’s leased car.

A
17 dollars comma 750 point 0 0
B
5 dollars comma 633 point 8 0
C
9 dollars comma 201 point 6 0
D
45 dollars comma 642 point 8 6
4

Jennifer is looking to lease a car. Bob’s Auto has a car available with a money factor of 0.00344 AAA Auto has the exact same car available with a money factor of 0.00313 Which of these statements is true?

A
The higher money factor with AAA Auto will give Jennifer the lowest monthly payment.
B
The lower money factor with Bob’s Auto will give Jennifer the lowest monthly payment.
C
The higher money factor with Bob’s Auto will give Jennifer the lowest monthly payment.
D
The lower money factor with AAA Auto will give Jennifer the lowest monthly payment.
5

If a person wanted to purchase his or her dream car, and keep it for many years, is leasing or buying the better option? Why?

A
Leasing would be the better option, so the newest model could be driven every few years.
B
Leasing would be the better option because it would allow the person to customize the car and drive it as much as he or she wants.
C
Buying would be the better option because the overall cost would be less. After the car is paid off, the owner gets much more value from the car, having already paid it off.
D
It wouldn't matter, as long as the person got to drive the dream car.
6

Determine the money factor for a lease with an interest rate of 9%

A
0 point 0 0 3 7 5
B
2 point 1 6 0 0 0
C
0 point 0 3 7 5 0
D
21 point 6 0 0 0 0
7

Sally is near the end of a three year lease on a car with an original MSRP of 38 dollars comma 000 Her leasing company claims that the car is now worth only 28 dollars comma 500 Which percentage represents the residual value of Sally’s leased car?

A
67 percent
B
75 percent
C
25 percent
D
33 percent
8

Cindy would like to lease a car worth $56,000 for a three-year period. The leasing company told Cindy that after three years, the car would have a residual value of $40,320. How much of the car’s original value will Cindy have to pay off during her three-year lease?

A
$1,389
B
$40,320
C
$7,200
D
$15,680

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