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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4543
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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Ur question: "CASH price of a car is $13,883. I can lease

Customer Question

ur question: "CASH price of a car is $13,883. I can lease the car for a monthlly price of $400. after 24 months I can buy the car, BUT, the depreciation that will be used is $313 a month.
So there is $87 dollars a month "expense".
What is the effective interest rate t..."
Submitted: 1 year ago.
Category: Finance
Expert:  socrateaser replied 1 year ago.


Can't answer the question without knowing the lease residual value (the purchase price at the end of the lease term)?

Customer: replied 1 year ago.
You are wrong. I told you the purchase price, it would be the initial purchase price of 13,883 less 24 times $313.
Customer: replied 1 year ago.
That is my problem. Had there been no residual, and 24 payments would have satisfied the loan, I could figure it out myself.
Expert:  socrateaser replied 1 year ago.

I think we're miscommunicating. I will reopen the question for others to assist. Best of luck with your difficulties and for using Justanswer!

Customer: replied 1 year ago.
You are funny. This is high school math.
60 years ago I could have answered easily.
Customer: replied 1 year ago.
At least use a less bombastic name.Mr Socrates would have no problem with this project
Expert:  PDtax replied 1 year ago.
Hi from just answer. I'm PDtax. Your first expert opted out, so I can assist.Are you doing a lease v. buy scenario? If so, What is the purchase price after the 24th month? I would typically ask you the implicit interest rate in the lease as well.
Customer: replied 1 year ago.
I cannot rate you because I did not open your response. Reason is the price of $52 was too much for me. Thanks for your response.
Expert:  Rakhi Vasavada replied 1 year ago.

Dear Friend,

Hello and welcome. Thank you for providing an opportunity to assist you.

As I understand, your Cash Purchase price is $ 13883. As against this, if you go for lease, you would pay $400*24 = $9600 for this.

Having said this, at $313 Per Month, the depreciation cost would be 313*24 = 7512. Therefore, the excess would be $17112 in total as against cash price of 13883 would be 17112-13883 = 3229.

You would be paying more 17112-13883 = 3229.

Therefore, the effective INTEREST COST would be
17112 23.25% total i.e. 11.62% ANNUALLY, FLAT.

I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,