Section 02 Loans & Expenses Unit 04 Cars - Practical Money Skills
Section 02 Loans & Expenses Unit 04 Cars - Practical Money Skills Section 02 Loans & Expenses Unit 04 Cars - Practical Money Skills
Formula overhead E Lease payment = Depreciation fee + Finance fee + Sales tax Depreciation fee = Net capital cost – Residual / Months in the lease Finance fee = Net capital cost + Residual x Money factor Example Negotiated Price = $18,872 Trade-in = $2,000 Down payment = $1,000 NET CAPITAL COST = $15,872 Residual value = $8,446 Term of lease = 48 months Money Factor (interest rate / 2400) = .0013750 Interest Rate = 3.3% Lease calculation Overhead E Formula + calculation Depreciation Fee = Net capital cost – Residual /48 = $15,872 – $8,446 / 48 = $154.71 Finance Fee = Net capital cost + Residual value x Money factor = $15,872 + $8,446 x .0013750 = $33.44 Sales tax = (Depreciation fee + Finance fee) x .13 (GST & PST) = $24.46 Lease payment = Depreciation fee + Finance fee + Sales tax = $154.71 + $33.44 + $24.46 = $212.61 per month 02.04.01 If the dealership comes up with a different monthly payment, you better ask why. Remember: always negotiate the price of the vehicle first before you discuss monthly payments. 86 section 02. loans & expenses choices & decisions
activity A Activity A The operating costs of a car name: date: Model year Make, size, model Fixed costs Depreciation—Purchase price $ __________ divided by estimated life ______ years $ Annual interest on car loan (if applicable) $ Annual insurance costs $ License, registration, taxes $ Variable costs Gasoline—estimated kilometres per year __________ divided by ______ km/litre times the average price of ______ per litre $ Oil changes for the year $ Tires $ Maintenance, repairs $ Parking and tolls $ Total costs $ Divided by kilometres per year Equals Cost per kilometre $ Part 2… 02.04.01 Based on business visits, phone calls, advertisements, and the Internet, obtain information for the cost of (a) an oil change, (b) a tune-up, (c) new brakes, (d) tires. choices & decisions section 02. loans & expenses 87
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- Page 3 and 4: Goal To investigate the financial r
- Page 5 and 6: overhead B Overhead B 02.04.01 Owne
- Page 7: overhead D Overhead D 02.04.01 Car
- Page 11 and 12: Goals Provide the information neces
- Page 13 and 14: Variables include overhead B Overhe
- Page 15 and 16: name: date: Scenario 1 Manuel wants
- Page 17 and 18: name: date: Budget Questions activi
- Page 19 and 20: name: date: Amount of loan $ Financ
- Page 21 and 22: Goals To provide the student with a
- Page 23 and 24: Before you begin shopping • Decid
- Page 25 and 26: Before you begin shopping overhead
- Page 27 and 28: Goals To help students develop an u
- Page 29 and 30: Personal characteristics Age Gender
- Page 31 and 32: Before deciding to buy a service co
- Page 33 and 34: name: date: My research says (Recor
- Page 35 and 36: True/False (4 marks) 1. _____ Most
Formula<br />
overhead E<br />
Lease payment = Depreciation fee + Finance fee + Sales tax<br />
Depreciation fee = Net capital cost – Residual / Months in the lease<br />
Finance fee = Net capital cost + Residual x <strong>Money</strong> factor<br />
Example Negotiated Price = $18,872<br />
Trade-in = $2,000<br />
Down payment = $1,000<br />
NET CAPITAL COST = $15,872<br />
Residual value = $8,446 Term of lease = 48 months<br />
<strong>Money</strong> Factor (interest rate / 2400) = .0013750<br />
Interest Rate = 3.3%<br />
Lease calculation<br />
Overhead E<br />
Formula + calculation<br />
Depreciation Fee = Net capital cost – Residual /48<br />
= $15,872 – $8,446 / 48<br />
= $154.71<br />
Finance Fee = Net capital cost + Residual value x <strong>Money</strong> factor<br />
= $15,872 + $8,446 x .0013750<br />
= $33.44<br />
Sales tax = (Depreciation fee + Finance fee) x .13<br />
(GST & PST) = $24.46<br />
Lease payment = Depreciation fee + Finance fee + Sales tax<br />
= $154.71 + $33.44 + $24.46<br />
= $212.61 per month<br />
<strong>02</strong>.<strong>04</strong>.01<br />
If the dealership comes up with a different monthly payment, you better ask why.<br />
Remember: always negotiate the price of the vehicle first before you discuss monthly<br />
payments.<br />
86 section <strong>02</strong>. loans & expenses<br />
choices & decisions
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