To find the total cost of leasing the scooter, we first need to calculate the total monthly payments. Mel will make 48 monthly payments of $198.80, totaling $9,510.40 over the 4 year period. At the end of the lease, Mel has the option to buy the scooter for 25% of its value, which is $1,969.75.
Therefore, the total cost of leasing the scooter is $9,510.40 + $1,969.75 = $11,480.15.
Now let's calculate the cost of buying the scooter with a loan. Mel puts down a payment of 10% of the scooter price, which is $787.90. The remaining loan amount is $7,091.10.
Mel will make 117 biweekly payments of $110.48, totaling $12,929.16.
Therefore, the total cost of buying the scooter with a loan is $787.90 + $12,929.16 = $13,717.06.
The cheaper option in the end is leasing the scooter, with a total cost of $11,480.15. The cost difference between leasing and buying with a loan is $13,717.06 - $11,480.15 = $2,236.91. Therefore, Mel can save $2,236.91 by choosing to lease the scooter instead of buying it with a loan.
Mel is buying a scooter priced at $7879.00. She can lease the scooter for $198.80 monthly for 4 years with a residual value of 25% or she can put down a payment of 10% of scooter price and take out a loan for the rest. To repay the loan, she will make biweekly payments of $110.48 for 4.5 years. Which will be the cheaper option in the end? What is the difference in cost?
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