Understanding how to calculate your monthly lease payment makes it easier
for you to make an informed decision. Yet, most of us shy away from the
complicated math on our lease contract, leaving it up to the dealer to
do the payment formula.
Actually, it's not that difficult! Once you understand all the figures
involved in calculating your monthly payments, everything else falls into
place. These key figures are:
MSRP (short for Manufacturer's Suggested Retail Price): This is the list
price of the vehicle or the window sticker price.
Money Factor: This determines the interest rate on your lease. Insist on
your dealer to disclose this rate before entering into a lease.
Lease Term: The number of months the dealer rents the vehicle.
Residual Value: The value of the vehicle at the end of the lease. Again,
you can get this figure from the dealer.
Now, let us calculate a sample lease payment based on a vehicle with an
MSRP (sticker price) value of $25,000 and a money factor of 0.0034 (this is
usually quoted as 3.4%). The scheduled-lease is over 3 years and the
estimated residual percentage is 55%.
The first step is to calculate the residual value of the car. You multiply
the MSRP by the residual percentage:
$20,000 X .55 = $11,000.
The car will be worth $13,750 at the end of the lease, so you'll be using:
$20,000 - $11,000 = $9,000
This amount of $9,000 will be used over a 36 month lease period giving us a
monthly payment of:
$9,000 / 36 = $250.
This is the first part of the monthly payment, called the monthly
depreciation charge.
The second part of the monthly payment, called the money factor payment,
factors the interest charge. It is calculated by adding the MSRP figure to
the residual value and multiplying this by the money factor:
($20,000 + $11,000) * 0.0034 = $105.4
Finally, we get the approximate monthly payment by adding the two figures
together:
$250 + $105.4 = $355.4
To recapitulate, the sample formula looks like this:
1- Monthly Depreciation Charge:
MSRP X Depreciation Percentage = Residual Value
MSRP Residual Value = Depreciation over lease term
Depreciation over lease term / lease term (number of months in the lease) =
monthly depreciation charge
2- Monthly factor money charge
(MSRP + Residual value) X Money factor = money factor payment
3- Sample Monthly Payment:
depreciation charge + money factor payment = monthly payment
Keep in mind that this is a simplified calculation that does not take into
account taxes, fees, rebates or any other incentives. The calculation gives
you a ballpark figure or a rough idea of what your lease payments for the
vehicle in question should be.
Latest news and information
State trying to calculate ice storm losses from businesses and ... Foster's Daily Democrat, NH - By JOHN QUINN CONCORD — The state is trying to determine how many individuals or businesses were affected by the Dec. 11 ice storm through a survey due by ... |
Security panel questions liberal FDI guidelines Economic Times, India - At present, both direct and indirect FDI are taken into account to calculate the total foreign holdings in companies that operate in sectors such as telecom ... |
Learning Curve introduces iWheel 1.1 for iPhone and iPod Touch prMac (press release), TX - In four easy steps, choose to calculate in days, weeks or months. Rotate the outer wheel to select a start date. Rotate the inner wheel to set the length of ... iPhone apps: iWheel, Grossinator, Crayon Physics |
 Variety | 5The 2008 Box Office Breaks Records Variety, CA - 1, 2009 to calculate how 2008 stacked up compared to previous years. Bottom line: Total ticket sales equaled arecord-breaking $9.63 billion, slightly ahead ... Box office resists recession |
 Fort Scott Tribune | Nursing home ratings questioned Fort Scott Tribune, KS - Nursing home staff: To calculate a staff rating, the number of staff hours per resident per day was used and then the information was case-mix adjusted. ... |
RE: Regional issues OmniNerd, TX - There is a loss of course, but how do you calculate it? If you put your product out there knowing it can easily be copied, then you are taking a huge ... RE: Regional issues |
Calculate your energy savings with the IBM Power Configurator tool TechRepublic, KY - Overview: Energy costs keep going up, and IT departments must find new ways to save. The IBM Power Configurator tool is designed to show you how IBM System ... |
Calculate your gas costs Joliet Herald News, IL - Gas prices in the city are well over $4 a gallon, topping $4.20 in many places for regular grade and $4.40 for the premium stuff. ... |
Why everyone lies about their movie's budget Los Angeles Times, CA - You know that at the end of game you can accurately calculate every player's batting average, based solely on his performance. Fudging isn't allowed. ... |
Factory Orders in the US Tumble More Than Forecast Bloomberg - Shipments of those goods, used to calculate gross domestic product, dropped 0.2 percent, wiping out the previously estimated gain. ... |
.how calculate. - Google News