Math for Grownups by Laura Laing Read Free Book Online

done on her financing and reads that she can get a financing package with a 0.00295 money factor. (Remember,
money factor
is like interest. It works a little differently, but if Crystal thinks of it as interest, she can get a good idea of how much she’ll pay for a car lease.)
    Finance fee = ($35,350 - $25,823) • 0.00295
    Finance fee = $9,527 • 0.00295
    Finance fee = $28.10
    She highlights this figure and moves on to her last piece of paper:
    Sales tax = monthly payment • sale tax rate , or S = p • t
     
    But Crystal doesn’t know her monthly payment yet, does she? Because she’s über-organized, it’s easy enough to find. All she needs to do is add the two numbers that are highlighted on the other pieces of paper: the depreciation fee and the finance fee.
    Monthly payment = depreciation fee + finance fee
    Monthly payment = $264.64 + $28.10
    Monthly payment = $292.74
    Crystal lives in Illinois, so her sales tax rate is 6.25%. Now she can finally use the formula
    Sales tax = monthly payment • sale tax rate , or S = p • t
    S = $292.74 • 0.0625
    Sales tax = $18.30
    She highlights the sales tax and then reaches for a clean sheet of paper. At the top, she writes the formula for finding the monthly lease payment:
    Monthly lease payment =
depreciation fee + finance fee + sales tax , or P = D + F + S
     
    She reviews the other three pieces of paper, in order to be sure that she’s found all of the components. Then she begins plugging in the values:
    P = $264.64 + $28.10 + $18.30
    Monthly lease payment = $311.04
    Crystal circles this figure three times, gathers all of her papers and staples them. She tucks these into a crisp, new folder, types “Monthly Lease Payment Calculations” into her handy-dandy label maker, prints the label, and sticks it on the folder tab. Her purse and keys are helpfully hanging by the back door, so she grabs them and heads out to the car dealership—confident that she’ll be able to make a good deal.
    After all, information—and organization—is power.

Lease or Buy?
     
    Because Crystal’s life is so organized and her clients are local, leasing is probably a good option for her. How much is she saving each month over the monthly cost of buying the car outright?
    Let’s say Crystal is able to finance the car over 5 years at 4% interest. Using the monthly payment formula reveals that her monthly payment would be $651.02.
    That’s more than twice her monthly payment on the lease!
    $651.02 - $311.04 = $339.98
     
    But remember that by leasing, Crystal will never own the car outright, and she’ll always have a car payment.
    Then there’s the mileage restriction. If, in any year, Crystal goes over her allotted miles—which may be as few as 12,000 miles—she will have to pay up to 25¢ per mile. Thus if she drives the car 16,000 miles, she’ll owe as much as $1,000—or more than 2 months’ worth of lease payments.
    The bottom line? Crystal will be responsible for the car during its most expensive years.

Problems with Problem Solving
     
    Deciding whether to buy or lease a car can seem overwhelming. And one of the reasons for this is that the math is complex. Finding the monthly payment on a loan or a lease requires the organizational skills of Martha Stewart! So if you’re more like Jack Black, here’s some help. Remember, multistep problems can be easier to solve if you ask a few simple questions.
1. What do you have?
List the information that you know. That includes any formulas you may need to use and the numbers that may be plugged into those formulas.
2. What do you want?
Write down the goal of the problem—finding the monthly payment or finding how much you can afford.
3. What can you do to make things easier?
No, the answer isn’t “get someone else to do it”! Here are some simple ideas: Draw a picture, make a chart, act out the problem, look for a pattern, list rules (like PEMDAS). And don’t forget to toss out any information that you don’t need. You won’t