![]() Determine the Residual Value (MSRP) x (Residual Percentage)Ģ. If we negotiate a sales price of $23,500 and have $1,000 in fees, for a term of 36 months, here’s what our monthly lease payment calculation would look like:ġ. We have a $1,500 down payment plus a $500 Military Rebate, but no trade in. In this example, we’re going to lease a car with an MSRP of $25,000, a residual value of 58% and a money factor of 0.00125. Let’s take a look at a sample lease payment calculation: Consider both the state tax rate, and also whether you have any local or county taxes. It’s important to understand your state’s tax treatment of leased vehicles, but generally you only pay tax on the leased portion of the vehicle - although, some states do require tax on the selling price of the vehicle. Similar to an interest rate on a financed vehicle the money factor is always expressed as a very small number, such as 0.00125. Most leases are 36 months, but other terms may be available. ![]() Refers to the amount financed, which is the total amount calculated to include the negotiated selling price of the vehicle, plus things like title and registration fees as we mentioned above, and minus things like any possible rebates or a down payment.Īnother name for the length of the lease. When it comes to leasing a vehicle, you’re paying for the depreciation that occurs from your use during the length of your lease, plus the interest and fees (like those of the title and registration). In general, depreciation is the rate at which a vehicle’s value declines over time. The Manufacturer’s Suggested Retail Price: sometimes referred to as the ‘sticker price’ because that’s where you find it - on the vehicle’s window sticker you can also find it on the dealership’s website. The residual value is expressed as a percentage of the MSRP. The higher the residual value, the lower the monthly payment will be. This is our estimate of what the vehicle will be worth at the end of the lease, and it’s used to determine the monthly lease payment. Now, let’s translate what each of these items refers to: ![]() Total Monthly Lease Payment = Monthly Depreciation + Finance Charge + Tax Monthly Tax = (Monthly Depreciation + Monthly Rent Charge) x (Tax Rate) Monthly Rent Charge = (Adjusted Capitalized Cost + Residual Value) x (Money Factor) Monthly Depreciation = (Adjusted Capitalized Cost - Residual Value) / Term ![]() Residual Value = (MSRP) x (Residual Percentage) First, let’s look at the basics - the five figures you’ll need in order to calculate a monthly lease payment: Let’s take a closer look and shed some light on how lease payments are figured. ![]()
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