Closing the Sale Sales contract – agreement to purchase a vehicle that states the offering price and all conditions of the offer; legal binding contract that is signed by the buyer and seller May be required to include a deposit to show you are making an offer in good faith Determine financing if you’re not paying cash Prior to delivery the dealer is responsible for cleaning the vehicle and installing any optional equipment

Trade in Your Loan Refinancing an existing vehicle loan: Do you have enough equity in your car to serve as collateral? Credit unions or online banks may prefer to provide used car loans Homeowners may be able to use an equity line of credit to pay off an auto loan

Leasing a Vehicle When leasing a car, you are paying for its use during a specified period of time At the end of the time, you have nothing Leasing usually offers: Lower monthly payments More expensive car for same payments Lower down payment

The Leasing Process Closed-end lease When the lease is over, you “walk away” from the car Most customers choose this type Open-end lease The car’s residual value is used to determine the payment If you return the car and it is worth less than estimated, you pay the difference

Lease Payment Calculation Variables 1. Capitalized cost (price) of the car 2. Estimated residual value at end of lease 3. Money factor (financing rate) on lease 4. Term or length of lease (typically 2 to 5 years)

Lease verses Purchase Analysis More or less costly to lease? When the lease ends Return the car? Buy the car?