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How to Calculate a Lease Deal

How to Calculate a Lease Deal

How to Calculate a Lease Deal

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The car lease payouts the car leasing company offers can be confusing for someone new to car leases. This comprehensive guide will help you understand what you can expect from your next car lease, and how to calculate the amount based on your needs and budget.

Term

In the example above, we take the advertised down payment ($2,399), subtract the first-month's payment (-$199), then add the acquisition fee ($595), which totals a real down payment of $2,795. We then divide this by the term of the lease (36 months), which calculates out to $77.64. This figure is the "hidden" cost of this lease deal, which we need to add to the advertised monthly payment of $199/month. So, the "real" monthly lease payment is equivalent to ($199 + $77.64) = $277 per month (I rounded up).

The residual is a value decided by the bank or leasing company. It’s just an prediction, and the vehicle’s actual value at the end of your lease will probably be either higher or lower than the residual. Banks estimate residual based on the vehicle you are leasing, the term length, and mileage. For example, a vehicle that’s driven 15,000 miles per year for 3 years (total 45,000 miles), will be worth less than the same vehicle if it’s driven only 10,000 miles per year (total 30,000 miles). (Source: www.buerklehonda.com)

Value

The residual is a value decided by the bank or leasing company. It’s just an prediction, and the vehicle’s actual value at the end of your lease will probably be either higher or lower than the residual. Banks estimate residual based on the vehicle you are leasing, the term length, and mileage. For example, a vehicle that’s driven 15,000 miles per year for 3 years (total 45,000 miles), will be worth less than the same vehicle if it’s driven only 10,000 miles per year (total 30,000 miles).

Continuing with the same example in Step 1, we already know our capitalized cost and residual value. They are $18,000 and $12,200 respectively. The money factor is what indicates how much interest will be charged. It can be expressed as an APR by multiplying the money factor by 2400. For example, a money factor of 0.001 could be seen as a 2.4% APR. In this example, the bank has offered us a money factor of 0.001. Let’s plug this into our formula: (Source: www.buerklehonda.com)

 

 

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