11 Steps to Your Best Leasing
Deal
Your monthly lease payment is actually the
total of three things: the vehicle depreciation cost, the
finance cost, and the sale tax. Leaving out the sales tax
aspect for now, you can roughly calculate the monthly payment
using the 11 simple steps below.
Print this page out and use
it as a worksheet.
To comparison shop, you should repeat these steps for each
vehicle you are interested in and ask the dealer to get a
different Money Factor from different leasing companies.
1. List the make and model and year vehicle you might lease:
2. Go to Kelly
Blue Book or check out the book value at your local
library and then list the total MSRP sticker price for
the vehicle:
$
3. List the best sale price for the vehicle that you expect
to get (this number will be called “capitalized cost” in
the lease):
$
4. If you have a trade in vehicle, go to www.kbb.com and
list the average trade in value for it here:
$
5. If you owe any loan balance on your trade in vehicle,
deduct it from the value to determine your net trade in allowance
and write the number here:
$
6. If you are going to pay any money down, write the number
here:
$
7. Ask the dealer what the residual value is for the vehicle
you listed in answer #1 above and write that number here:
$
8. Ask the dealer what the Money Factor is from two or three
Leasing Companies and write the number here:
a.
b.
c.
Note: if the dealer won’t tell you what it is, you
can estimate it by using the normal interest rate for a motor
vehicle loan and dividing it by 2400.
Now you’re ready to make the
monthly payment calculation.
9. First you need to calculate the vehicle depreciation
cost. Take the capitalized cost number from Answer #3 above,
and subtract the net trade in allowance (your Answer #5 above),
and subtract any down payment (your Answer #6 above), and
then subtract the residual value number from Answer #7 above,
and then divide that number by the number of months in the
lease you expect to have. This is the monthly vehicle depreciation
cost. Write the resulting number here:
$
10. You still need to know the finance cost. Take the capitalized
cost number from Answer #3 above, and subtract the net trade
in allowance (your Answer #5 above), and subtract any down
payment (your Answer #6 above), and then add the residual
value number from Answer #7 above, and then multiply that
number by the Money Factor number from Answer #8 above. This
is the monthly finance cost. Write the resulting number here:
$
11. You’re almost done. Now just add the Depreciation
Cost number from Answer #9 above to the Monthly Finance Cost
number from Answer #10 above. This is approximately what
your monthly lease payment will be, plus sales tax. Write
that number here:
$
Note: If you are using Ford Credit for a lease, the last
time we checked they used a special formula that resulted
in a total monthly lease payment about 2% or 3% higher than
the final result in Answer #11 above.
Here’s an example.
Let’s suppose you decided to lease a new motor vehicle
for 3 years and the MSRP sticker price total is $30,000.
You negotiated the lease price (the capitalized cost) down
to $28,000 and you are not paying any money down. You have
a trade in vehicle and you argued to get a trade in allowance
that is $5,000 more than what is owed on it. Your Net Capitalized
Cost is $28,000 - $5,000 = $23,000.
You insisted on knowing, so the dealer told you that the
Money Factor rate is .00375 and the Residual Value is 60%
of the MSRP. Your residual amount is 60% of $30,000 = $18,000.
Now you can figure the math.
Depreciation Cost: ($28,000 - $5,000 - $18,000) divided
by 36 = $138.89
Finance Cost: ($28,000 - $5,000 + $18,000) x .00375 = $153.75
Monthly Lease Payment: $138.89 + $153.75 = $292.64
(Just add your monthly sales tax and you’re done) |
