Financial Planning Case #1: The Johnsons Decide to Buy a Car fin dq 8

User Generated

Qepngul

Business Finance

Description

  • Which used car would you advise the Johnsons to buy? Why?
  • e) Would you recommend that they purchase or lease a low-priced new vehicle instead of buying a used vehicle? Why or why not?

User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

If the couple is very strapped for money they could consider doing a carpool to work and offer to pay part of the  gas which would be equivalent to her riding the bus. If buying a car is their only option, they would need to consider what items they could live without month to month and see what their main necessities are and where they could cut back. Some examples on how they could cut back include less trips out to do fun things if their budget typically involves going to the moves. They could also cut back on entertainment expenses such as TV and internet because these are not true necessities and can be accessed thru a local library. I would not recommend leasing a car. They would end up paying around the same amount for a lease as they would for buying the car out right and in the end have no ownership over the vehicle and also a very high insurance rate due to needing extra coverage.  I would choose the first vehicle. Although being sold by a private owner and not having a warrenty, you as the buyer has acess to all of the vehicles records and know more information about the vehicle. It also has a lower price and less mileage which means it would be able to last longer.


Anonymous
Awesome! Made my life easier.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Content

Related Tags