Which of the following expenditures will be the same whether you lease or buy a new vehicle?

• A. Monthly loan payments
• B. Depreciation expense
• C. Insurance costs
• D. Down payment

Answer: (C)

Verified step by step guidance

1. Understand the context of the question: The problem is asking which expenditure remains constant regardless of whether you lease or buy a vehicle. This requires analyzing the nature of each listed expense.
2. Analyze 'Monthly loan payments': These are specific to buying a vehicle and are not applicable when leasing, as leasing involves monthly lease payments instead. Therefore, this expense differs between leasing and buying.
3. Analyze 'Depreciation expense': Depreciation is an accounting concept that applies to owned assets. When leasing, you do not own the vehicle, so depreciation does not apply. This expense also differs between leasing and buying.
4. Analyze 'Insurance costs': Insurance is required for both leasing and buying a vehicle. The cost of insurance is generally independent of whether the vehicle is leased or purchased, making it the same in both scenarios.
5. Analyze 'Down payment': A down payment is typically required when purchasing a vehicle, but it may also be required for certain lease agreements. However, the amount and structure of the down payment can vary significantly between leasing and buying, so it is not guaranteed to be the same.