How To Calculate Your Car Lease Payment

High interest rates equate to high monthly repayments.

How to calculate your car lease payment. If your vehicle depreciates 10 000 over a three year lease and your interest rate is 5 you ll be paying 13 88 a month in interest on a consistent monthly basis. Capitalized cost residual value number of months. Next determine the residual value of the car at the end of the lease by multiplying the sticker price of the car by the percentage to find the residual value. For example other fees may be imposed in addition to the down payment and a security deposit may be required. The money factor is sometimes used by car dealerships to calculate the monthly interest owed.

You can calculate your monthly lease payment by adding the vehicle s monthly depreciation plus the monthly finance charge. Many car dealers will make every effort to move your thoughts from the purchase price and to the lease payments. To calculate a lease payment start by calculating the net capitalized cost which is the negotiated selling price minus any down payment or other credits like a trade in. For our example we are going to lease a car with an msrp of 23 000. Put some money aside for emergencies.

If you have not yet gotten the lease. Your monthly lease payment is the payment you have been paying throughout the life of your lease. When you lease a car your interest payments are calculated as a percentage of the depreciation of the vehicle the decrease in your car s value. The manufacturer has set a residual of 60 i e 21 000 for a 36 month. Let s imagine that a particular car has an msrp of 35 000.

This can be rearranged to solve for the payment pmt pmt pv x i 1 1 1 i n if we treat the present value pv as the asset value to be financed at the start of period 1 a the discount rate i as the lease interest rate and n as the number of lease payments required under the agreement then the leasing calculation formula can be restated as follows. You can find this amount on your lease bills. Use this auto lease calculator to estimate what your car lease will really cost. Find your monthly lease payment. Walk through a sample lease.

To best explain the calculation steps we are going to create a sample lease. Here is the formula for calculating monthly depreciation. Monthly lease payments can be severely impacted by interest rates so it is vital to consider interest rates before signing a lease agreement. An extra charge may be imposed at the end of the lease term if your liability if any is based on the difference between the residual value of the automobile and its realized value at the end of the lease term.