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No you didn't do it correctly....... Posted by Mike Lynch [Email]  (#81) [Profile/Gallery]
(more from Mike Lynch) on Thu, 15 Jul 2004 13:19:24
In Reply to: OK - excel and finance geeks - lease v. buy, BrianD, Wed, 14 Jul 2004 06:41:34 Members do not see ads below this line. - Help Keep This Site Online - Signup |
I'm not a geek, and I still just crawl in excel, but let me state some facts about Saabs, 0% and leasing.
And I am nobody's financial advisor. My family's motto is "A man who can't live beyond his means shows a lack of imagination"
0% for 60 months vs 5% APR conventional autmobile loan is a no brainer on a $35k car. The finance charge on $35k for 60 months is only $4,629. So if there is a $5k incentive IN LIEU of the 0%, take incentive and finance normally. My credit union had 3.75% plastered on the wall the other day before Greenspan raised the rates. And when you take 0% you screw yourself out of any potential interesest refund for early payoff.
$35,000 at 0% for 60 months = $583 vs $30k at 5% = $566, as I said a no brainer.
But the lease is where you really goofed up. It looks like you assumed no incentive and a 5% rate. Wrong, a Saab lease COMBINES a healthy incentive AND a low rate.
If the incentive is only $4k instead of the $5k in lieu of the 0% and the rate is around an equivalent 1.4% and the residaul is 23%. Now your payment is $415 for 60 months with an $8,050 buyout. So lemme's see $566 vs $415, but then you have $8,050 at the end. $151 times 60 = $9,060 in savings. Or if you invested that $151 a month for 60 months at 5% you'd make anther $1,000 ish in interest and have over $10k to buy your car for $8k.
I mixed up the lease #'s a little to equalize the terms. I used the Saab 60 month residual, but the 36 month rate. If I use 36 month terms the $30k loan at 5% is $899 a month and the 36 month lease is only $486 with a $15,050 (43%) residual. The $413 a month you saved ($413x36=$14,868) buys the car at the end.
So that's why I say the Saab lease is the best overall value, because Saab combines incentive and rate on the lease instead of the in lieu situation on th 0% vs incentive.
Imagine what it's like when the incentive is greater or the same in the lease vs the purchase as on many Saab models. The example I used the lease was $4k and the in lieu was $5k.
Did I do that right?
posted by 63.197.222...
, Thu, 15 Jul 2004 13:19:24 <-- Viewing This Message, Wed, 14 Jul 2004 16:41:59
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