How To Calculate Your Car Lease Payment

Walk through a sample lease.

How to calculate your car lease payment. Many car dealers will make every effort to move your thoughts from the purchase price and to the lease payments. 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. Here is the formula for calculating monthly depreciation. Put some money aside for emergencies. When you lease a car you re paying for the depreciation that occurs from your use of the vehicle.

You can calculate your monthly lease payment by adding the vehicle s monthly depreciation plus the monthly finance charge. Before you decide to lease a car you should calculate your monthly expenses and check if your lease payments have any impact on utility bills. 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. 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. The manufacturer has set a residual of 60 i e 21 000 for a 36 month.

Monthly lease payments can be severely impacted by interest rates so it is vital to consider interest rates before signing a lease agreement. Let s imagine that a particular car has an msrp of 35 000. You can find this amount on your lease bills. For our example we are going to lease a car with an msrp of 23 000. 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.

If you have not yet gotten the lease. For example other fees may be imposed in addition to the down payment and a security deposit may be required. Capitalized cost residual value number of months. The money factor is sometimes used by car dealerships to calculate the monthly interest owed. Use this auto lease calculator to estimate what your car lease will really cost.

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. High interest rates equate to high monthly repayments. Your monthly lease payment is the payment you have been paying throughout the life of your lease. Enter the car s msrp final negotiated price down payment sales tax length of the lease new car lending rate.