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Unformatted text preview: Prentice-Hall, Inc. 1 Chapter 8 The Automobile Decision Your automobile! • Is a _____________________________ ______ : a good that provides benefits that extend beyond one year. Expenses • Expenses for auto include: – Insurance (vehicle model, driving record) – __________________ (annual periodic expense expense) – Maintenance & operating expenses (SUVs drink more gas than a Hyundai) – Financing charges if applicable Leasing • Sign a lease – negotiate a fair vehicle value (also known as the: _________________________________ ) – Negotiate your trade in price (Kelly Blue book) – www.kbb.com – Negotiate a low finance charge – Choose a vehicle with slow depreciation Types of Leases • ____________________ leases, or walk-away leases – normally offer a purchase option – require the dealer to be responsible for resale – account for about 80% of all leases • ______________________ leases – compare the fair market value to the lease’s residual value of the vehicle – are to be avoided because you pay the difference Your Monthly Lease Payment • Your lease payment depends on the following factors – agreed-upon price up front fees – up-front fees – down payment or trade allowance – residual value – finance charge – length of the lease Prentice-Hall, Inc. 2 Amount you pay for lease • No easy formula…. • www.leasesource.com/workshop • Lease payments are generally less than purchasing payments....
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- Spring '09