Question

Mark wants a new car that costs $30,000. He only has $500 in his savings account and $300 in his checking account. Which financing option should he choose?
A) Purchase the car with a 10 percent down payment.
B) Lease the car with a 0 percent down payment.
C) Lease the car with a 35 percent down payment.
D) Purchase the car with a 20 percent down payment

Answer 1

I'd say B. Though with that little saved I'd say he needs to be far more realistic with his budget.

Answer 2

ANSWER: B) Lease the car with a 0 percent down payment.

EXPLANATION: The car Mark wants to buy has a price of $30,000 whereas his savings account has $500 and checking account has $300 which adds up to $800. The amount of money Mark has is only 2.66% of the cost of the car.

If he tries for option A which is buying the car with 10% down payment, then it would not have been possible as 10% of the car price would be $3,000. Mark at this moment will be short of money by $2,200.

If he tries for option B which is leasing with 0% down payment, Mark will be able own the car without paying any money and also saving the entire amount that his savings account and checking account has.

If he tries for option C which is leasing by paying 35% down payment, Mark will need $10,500. He will run short of money by $9,700.

If Mark tries for option D which is purchasing the car by paying 20% down payment, then he will need $6,000 which is impossible for Mark even if he pulls in money from both the accounts. He will run short of money by $5,200.