PmtCalcHow a lease payment is calculated
Depreciation = (adjusted cap cost − residual) ÷ months
Finance charge = (adjusted cap cost + residual) × money factor
Payment = depreciation + finance charge + tax
The adjusted capitalized cost is the negotiated price plus capitalized fees minus your down payment and trade-in. The residual is what the car should be worth at lease end, set by the leasing company as a percent of MSRP. The money factor is the lease rate: multiply it by 2,400 to get an approximate APR.
Example
A car with a $40,000 MSRP negotiated to $38,000, $995 acquisition fee, $2,000 down, 58% residual ($23,200), 6% APR (money factor 0.00250), 36 months and 6% tax comes to about $565.70 a month.
Frequently asked questions
Is a big down payment on a lease a good idea?
Usually not. Money put down on a lease lowers the payment but is lost if the car is totaled or stolen early. Many experts suggest putting little or nothing down on a lease.
Can I negotiate a lease?
Yes. The price (cap cost) is negotiable just like a purchase, and dealers sometimes mark up the money factor. Ask for both numbers in writing and check them here.
Lease or buy?
Leasing gives a lower payment and a new car every few years, but you never stop paying. Buying costs more monthly at first and less over time if you keep the car. Compare with the auto loan calculator.
Sources
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