To Buy or To Lease? That is the Question!
According to USA Today, “Not long ago, in the pre-pandemic age, carmakers braced for
the possibility that Americans would eventually stop buying vehicles, choosing instead
to rely upon rideshares like Lyft or Uber. But COVID-19 has upended those
expectations, swinging the pendulum back in the direction of personal car ownership as
Americans say they’re increasingly likely to drive themselves instead of riding in
someone else’s car or taking mass transit.” (Source:
https://www.usatoday.com/story/money/cars/2020/09/04/coronavirus-cars-pickups-suvscovid-19/5703590002)
Let’s assume you do not currently have a car and that you have already made the
decision that you want to drive a new car. The next step in the process is to decide
whether to buy or to lease. For most shoppers, paying cash for a new car is not an
option, so we’ll assume your choices are a new car loan or a lease.
Part One:
Research the pros and cons of buying a new car versus leasing. Ensure that your
sources are current, since market conditions change. You should use reliable, credible
primary sources. Do not use Wikipedia since it is not a primary source.
Write an essay, no more than 2 pages long, stating your decision and supporting that
decision with evidence from your sources. What pros and cons did you consider? What
economic factors were important to your decision?
Label the essay as Part One and attach it to the end of this document. Be sure to cite
your sources, using MLA format.
Part Two:
For your choice of car make and model, complete the worksheet on page 2. You can
usually obtain the needed information from the car maker’s website or from the website
of a local dealer. Be sure to check for current or local special offers! Cite the source(s)
of your information.
If you have trouble finding the information you need, please ask your instructor for help!
Note: MSRP means manufacturer’s suggested retail price.
Residual value is the value of the car at the end of the lease. It’s the amount you
would need to finance if you decided to buy the car when the lease ends. If you
can’t find this information, assume it is 60% of the MSRP.
MAT-143-Critical Thinking Name _____________________________
Fall, 2021 Date ______________________________
2
Car Make/Model: _______________________________________________________________
Source(s) of information for table below: ___________________________________________
LEASE OPTION AMOUNT
1. MSRP $ ________________
2. Amount due at signing $ ________________
3. Term of lease (in months) ___________months
4. Monthly lease payment $ ________________
5. Total of all lease payments $ ________________
6. Total cost of leasing (line 2 + line 5) $ ________________
7. Residual value $ ________________
PURCHASE OPTION AMOUNT
8. MSRP $ ________________
9. Down payment amount $ ________________
10. Amount financed $ ________________
11. Loan interest rate
(Source of your loan)
_______%
(source: _________________________)
12. Loan term (in months) _______________
13. Monthly Loan Payment
(state and use appropriate formula from textbook)
$ ________________
14. Total cost of purchasing (include down payment) $ ________________
MAT-143-Critical Thinking Name _____________________________
Fall, 2021 Date ______________________________
3
Part Three:
Now that you have completed the calculations from part two, would you change your
decision to lease or buy? Why or why not?
Under what circumstances, if any, would you change your decision?
Answer part three below or on an attached page labeled Part Three.