Initial answers before any research
- If you could have any car you wanted, what would it be? 2017 Ferrari California T
- How much do you think that car costs? $200,000
- How much do you think a monthly payment would be for that car? $900/month
- How much do you think insurance would cost on the car? $500/month
- How much do you think monthly gas costs would be for the car? $500
CAR #1: 2017 Ferrari California T
MSRP: $202,723
Blue Book Value: $202,723
Insurance Cost: $489.37/month [6 month premium: $2,936.19]
Financing monthly payment:
Ferrari 40 month: 4631.01 X 0.0975 = 451.52 +4631.01 = $5,082.53
Ferrari 60 month: 3787.67 X 0.0975 = 369.30 + 3787.67 = $4,156.97
Monthly Gas Cost (based on 1,000 miles per month):
(assuming gas in California costs $3.76 according to gasprices.aaa.com)
1000 miles per month / 18 mpg = 55.56 X 3.760 = $208.89/month or $2,506.68/year
Total Cost for a Ferrari:
based on a 40 month finance
489.37 + 5,082.53 + 208.89 = 5780.79 X 12 = $69,369.48 (for 1 year) X 4 = $277,477.92 (for 4 years)
Blue Book Value: $202,723
Insurance Cost: $489.37/month [6 month premium: $2,936.19]
Financing monthly payment:
Ferrari 40 month: 4631.01 X 0.0975 = 451.52 +4631.01 = $5,082.53
Ferrari 60 month: 3787.67 X 0.0975 = 369.30 + 3787.67 = $4,156.97
Monthly Gas Cost (based on 1,000 miles per month):
(assuming gas in California costs $3.76 according to gasprices.aaa.com)
1000 miles per month / 18 mpg = 55.56 X 3.760 = $208.89/month or $2,506.68/year
Total Cost for a Ferrari:
based on a 40 month finance
489.37 + 5,082.53 + 208.89 = 5780.79 X 12 = $69,369.48 (for 1 year) X 4 = $277,477.92 (for 4 years)
CAR#2: 2018 Jeep Wrangler Unlimited Rubicon
MSRP: $40,995
Blue Book Value: $36,039
Insurance Cost: $254.58/month [6 month premium: $1,527.50]
Financing monthly payment:
Jeep 40 month: 941.12 X 0.0975 = 91.76 + 941.12 = $1,032.88
Jeep 60 month: 769.69 X 0.0975 =75.04 + 769.69 = $844.73
Monthly Gas Cost (based on 1,000 miles per month):
(assuming gas in California costs $3.76 according to gasprices.aaa.com)
1000 miles per month / 18 mpg = 55.56 X 3.760 = $208.89/month or $2,506.68/year
Total Cost for a Jeep:
254.58 + 1032.88 + 208.89 =1,476.35 X 12 = $17,716.2 (for 1 year) X 4 = $70,864.8 (for 4 years)
Blue Book Value: $36,039
Insurance Cost: $254.58/month [6 month premium: $1,527.50]
Financing monthly payment:
Jeep 40 month: 941.12 X 0.0975 = 91.76 + 941.12 = $1,032.88
Jeep 60 month: 769.69 X 0.0975 =75.04 + 769.69 = $844.73
Monthly Gas Cost (based on 1,000 miles per month):
(assuming gas in California costs $3.76 according to gasprices.aaa.com)
1000 miles per month / 18 mpg = 55.56 X 3.760 = $208.89/month or $2,506.68/year
Total Cost for a Jeep:
254.58 + 1032.88 + 208.89 =1,476.35 X 12 = $17,716.2 (for 1 year) X 4 = $70,864.8 (for 4 years)
Leasing the Jeep
Monthly Payment = 334
Insurance = 254.58
Gas = 208.89
____________________
Monthly : $797.47
Yearly : $9,569.64
4 Year Total: $38,278.56
Insurance = 254.58
Gas = 208.89
____________________
Monthly : $797.47
Yearly : $9,569.64
4 Year Total: $38,278.56
BUYING VS LEASING
PROS OF BUYING
you can drive as many miles as you'd like
you may customize your car
you have ownership over your car
no lease end charges
CONS OF BUYING
higher monthly payments
post warranty repair costs
PROS OF LEASING
Lower monthly payments than an auto loan
Excitement of driving a new car every two or three years
You don’t have to worry about trading or selling your car
CONS OF LEASING
You can only drive a set number of miles
You must consistently and properly maintain your car
You must have a stable and predictable source of income
Lease end charges
PROS OF BUYING
you can drive as many miles as you'd like
you may customize your car
you have ownership over your car
no lease end charges
CONS OF BUYING
higher monthly payments
post warranty repair costs
PROS OF LEASING
Lower monthly payments than an auto loan
Excitement of driving a new car every two or three years
You don’t have to worry about trading or selling your car
CONS OF LEASING
You can only drive a set number of miles
You must consistently and properly maintain your car
You must have a stable and predictable source of income
Lease end charges
In Conclusion...
One major lesson I have learned from this project is the importance of calculating ALL costs before buying/leasing a vehicle. I think this can apply to anything you buy. We are so used to only focusing on the face value that we forget to look at maintenance and insurance and gas. Many people I know have bought cars that they can afford to pay the monthly for but when it comes to insurance and gas they become stressed out.
One thing that really surprised me about this project is that the cost of the realistic car of my dreams pretty much matches up with the amount I pay for my current car. While doing this project I decided to add up all the costs of the car I own now and it was almost identical to the 2018 Jeep Wrangler Unlimited Rubicon.
Something I will remember is to save up my money and buy a car that I can afford to pay the monthly for and maintain. I never understood the concept of leasing because to me it seems like a waste of money. The way I look at it is you’re throwing away your money. Buying a car is an investment with a giant return as you save a lot of money in the long run. Leasing is good for car enthusiasts who plan on switching out their cars every 2-3 years.
I read a book called The Total Money Makeover by Dave Ramsey which talked about the importance of owning what you have instead of constantly acquiring debt and this project made me understand what he was talking about in the book much better. Many people buy so many things that they don’t need and lack in taking care of their health or buying quality food to nourish their bodies. Just because someone could buy/lease the car of their dreams doesn’t mean they can afford it.
I can use the knowledge I learned from this project in so many aspects of my life. This project opened my eyes to money and how important it is to look at all costs before buying something. As a young adult I am just trying to understand money and money management. I think most people never really understand money and how a credit card works and how to budget until it is too late. Although the amount of money you have can not buy you happiness, stability can. If you’re constantly worried about how you’re going to pay the monthly on your Ferrari then you are never going to be able to lay back and enjoy the car.
One thing that really surprised me about this project is that the cost of the realistic car of my dreams pretty much matches up with the amount I pay for my current car. While doing this project I decided to add up all the costs of the car I own now and it was almost identical to the 2018 Jeep Wrangler Unlimited Rubicon.
Something I will remember is to save up my money and buy a car that I can afford to pay the monthly for and maintain. I never understood the concept of leasing because to me it seems like a waste of money. The way I look at it is you’re throwing away your money. Buying a car is an investment with a giant return as you save a lot of money in the long run. Leasing is good for car enthusiasts who plan on switching out their cars every 2-3 years.
I read a book called The Total Money Makeover by Dave Ramsey which talked about the importance of owning what you have instead of constantly acquiring debt and this project made me understand what he was talking about in the book much better. Many people buy so many things that they don’t need and lack in taking care of their health or buying quality food to nourish their bodies. Just because someone could buy/lease the car of their dreams doesn’t mean they can afford it.
I can use the knowledge I learned from this project in so many aspects of my life. This project opened my eyes to money and how important it is to look at all costs before buying something. As a young adult I am just trying to understand money and money management. I think most people never really understand money and how a credit card works and how to budget until it is too late. Although the amount of money you have can not buy you happiness, stability can. If you’re constantly worried about how you’re going to pay the monthly on your Ferrari then you are never going to be able to lay back and enjoy the car.