Sameer wants to finance the purchase of a new car. He has two options. The first is to lease the car from the dealer and buyback the car after four years for $10,000. Monthly lease payments will be $377.89 starting with the day of purchase for four years at an interest rate of $3.8% compounded quarterly. The second option is from the bank and requires a down payment of $5000 and monthly payments of $469.38 for four years at an interest rate of 3.5% compounded quarterly. Which option do you recommend that Sameer take? What is the economic advantage?

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The Answer of Sameer wants to finance the purchase of a new car. He has two options. The first is to lease the car from the dealer and buyback the car after four years for $10,000. Monthly lease payments will be $377.89 starting with the day of purchase for four years at an interest rate of $3.8% compounded quarterly. The second option is from the bank and requires a down payment of $5000 and monthly payments of $469.38 for four years at an interest rate of 3.5% compounded quarterly. Which option do you recommend that Sameer take? What is the economic advantage?

Sameer Wants to Finance the Purchase of a New Car