| Understanding how to calculate your
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| | 36 month lease period giving us amonthly
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| monthly lease payment makes it easierfor
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| | payment of:
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| you to make an informed decision. Yet,
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| | $9,000 / 36 = $250.
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| most of us shy away from the
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| | This is the first part of the monthly
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| "complicated" math on our lease contract,
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| | payment, called the monthlydepreciation
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| leaving it up to the dealer todo the
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| | charge.
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| payment formula.
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| | The second part of the monthly payment,
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| Actually, it's not that difficult! Once
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| | called the money factor payment,factors
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| you understand all the figuresinvolved in
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| | the interest charge. It is calculated by
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| calculating your monthly payments,
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| | adding the MSRP figure tothe residual
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| everything else falls intoplace. These
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| | value and multiplying this by the money
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| key figures are:
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| | factor:
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| MSRP (short for Manufacturer's Suggested
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| | ($20,000 + $11,000) * 0.0034 = $105.4
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| Retail Price): This is the listprice of
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| | Finally, we get the approximate monthly
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| the vehicle or the window sticker price.
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| | payment by adding the two
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| Money Factor: This determines the
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| | figurestogether:
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| interest rate on your lease. Insist
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| | $250 + $105.4 = $355.4
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| onyour dealer to disclose this rate
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| | To recapitulate, the sample formula looks
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| before entering into a lease.
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| | like this:
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| Lease Term: The number of months the
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| | 1- Monthly Depreciation Charge:
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| dealer rents the vehicle.
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| | MSRP X Depreciation Percentage = Residual
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| Residual Value: The value of the vehicle
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| | Value
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| at the end of the lease. Again,you can
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| | MSRP - Residual Value = Depreciation over
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| get this figure from the dealer.
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| | lease term
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| Now, let us calculate a sample lease
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| | Depreciation over lease term / lease term
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| payment based on a vehicle with an
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| | (number of months in the lease) =monthly
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| MSRP (sticker price) value of $25,000 and
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| | depreciation charge
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| a money factor of 0.0034 (this isusually
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| | 2- Monthly factor money charge
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| quoted as 3.4%). The scheduled-lease is
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| | (MSRP + Residual value) X Money factor =
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| over 3 years and theestimated residual
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| | money factor payment
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| percentage is 55%.
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| | 3- Sample Monthly Payment:depreciation
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| The first step is to calculate the
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| | charge + money factor payment = monthly
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| residual value of the car. You
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| | payment
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| multiplythe MSRP by the residual
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| | Keep in mind that this is a simplified
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| percentage:
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| | calculation that does not take
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| $20,000 X .55 = $11,000.
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| | intoaccount taxes, fees, rebates or any
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| The car will be worth $13,750 at the end
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| | other incentives. The calculation
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| of the lease, so you'll be using:
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| | givesyou a ballpark figure or a rough
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| $20,000 - $11,000 = $9,000
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| | idea of what your lease payments for
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| This amount of $9,000 will be used over a
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| | thevehicle in question should be.
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