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How to Calculate Monthly Lease Payments

173 messages,  Last post on Apr 11, 2013 at 2:36 PM

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What is this discussion about? Car Leasing

Dissecting the Deal - How To Spot a Good Lease
 
10 Steps to Leasing a New Car
 
The "Residual Value" of Leasing
 
Calculate Your Own Lease Payment

Messages Page 11 of 18

#100 of 173 How to find lease money factors and residuals by johngettler

May 19, 2012 (3:33 pm)

Hello all,
 
1. Unfortunately, there isn't a law requiring auto makers to publicly disclose their lease money factor rates (interest rate) or their residual rates 9calue of car after duration and miles are put on.) This makes it *very* difficult to compare lease incentives across different comparable makes, models and trims. I wish there were a law enacted that would force this information to be as clear as auto loan interest rates are today.
 
2. Somehow, Car_man who is a "host" on these excellent Edmunds Forums, seems to thankfully have access to nearly unlimited lease money factor and residual info from most makers, and for years has been reporting very accurate information in reply to each individual request. But he is only one man, and it can take some days for him to get back to each person. I have always been super curious, Car_man, where *do* you get this information, and how come we all can't just get to the data directly? I know of course, it's not up to you, but can you give us some insight on how you gather this info? And why edmunds.com can't or won't just publish this extremely valuable data in an open manner? Of course, thank you for all the information that you *do* pour out every day Car_man.
 
3. The best always accessible website that I have found that has a good amount of detailed lease info for many cars, is this link below (sorry Edmunds, it's from cars.com). It is *not* always accurate, and should be taken with a grain of salt, but I have found it to be helpful, but not nearly as accurate as Car_man. Note that this site lists money factors as a percentages, which is actually the money factor number times 2400 (for example MF 0.0006 x 2400 = 1.44%) to get a fairly comparable number to standard auto loan interest rates. Just enter you zip, and then click into each model and trim to see detail lease info.
 
http://www.cars.com/go/advice/incentives/index.jsp
 
4. Each dealer *should* be able to provide you MF and Residual for a specific car, with a specific lease length in months, and miles per year. But you have to "get involved" with a sales guy to begin to extract this kind of info. Ugh.
 
5. There is a company called ALG that publishes a "residual guide" each quarter of what they recommend as the residual for each model and trim, after different lease lengths of time, and different mileage usage. They *will sell* you a single copy of their "Residual Percentage Guide 2012 Models National" book for about $50 by calling the number on this link, 1-805-898-8400. The manufacturers *do not* always match these residuals all the time, but it *is* a fair way to generally see what models and trims would give you a relatively cheaper monthly payment, due to holding their value better.
 
https://www.alg.com/products/guidebooks.html
 
Hope this helps everyone.
John Gettler

#101 of 173 Lease Mercedes C250 Coupe Assessment? by jenbtravels

Jun 26, 2012 (2:56 pm)

Hi - I'm a first time car buyer and I'm planning to lease the Mercedes C250 Coupe. I don't believe this is a great deal, but I'd love to hear from someone about this that is far more experienced than myself:
 
MSRP: $44,250 (includes multi-media, premium package, and 18" alloy wheels, keyless go)
Residual: $30545
Annual Miles: 10,000
Months: 36
Payment: $647
Due at Signing: $1250
Sales Tax: 1.50% = 663.75

#102 of 173 Re: Lease Mercedes C250 Coupe Assessment? [jenbtravels] by kirstie_h HOST

Jun 26, 2012 (3:07 pm)

Replying to: jenbtravels (Jun 26, 2012 2:56 pm)
This is more of a general topic for asking about how to calculate leases - you might find more specific help in our Mercedes C-Class Lease Questions discussion. We'll leave your post here, but if you click on my link and post in that discussion, you might get more feedback. You can also see what other recent buyers have reported.

#103 of 173 Reconciling advertised lease payment with my own calculation by ksrp

Jul 06, 2012 (5:00 pm)

I saw the following lease ad on a manufacturer's website --
 
"$199/Month, 36-Month Lease, $1,999 due at Lease Signing. Includes 1st Month's Payment and Acquisition Fee. Excludes taxes, title and fees."
 
Additional details in the fine print --
 
MSRP $19,550 plus destination charge of $795. Payment based on capitalized cost of $18,440. Total payments of $7,160. Purchase option at lease end of $12,004 plus tax or price negotiated at signing.
  
-----------
 
Firstly, I want to understand how the capitalized cost was arrived at. Shouldn't the capitalized cost be 19550+795-1999 = 18346?. They are claiming it is 18440.
 
Also, I want to find the MF they are using. Here's my calculation from the $199 monthly payment. The depreciation payment is (18440 - 12004)/36 = 179. That leaves $20 for the interest, so (18440+12004)*MF = 20. That makes MF = 0.000657, so interest rate = 0.000657*2400 = 1.57%
 
Is this calculation correct?
 
Since total payments required is 7160 and each payment is 199, they are expecting 36 payments. Then why do they claim $1999 includes the first month's payment?
 
Lastly, what should I expect to pay for 'taxes, title and fees" in California?
 
Appreciate any feedback.

#104 of 173 2012 lacrosse touring by dwsindy

Jul 06, 2012 (6:37 pm)

MSRP. $41735
Sell. $40564.25
Cap cost reduction $5250.00
Money Factor. $.000583. (1.4%)
Residual. $22954.25
Payment. $446.78
Out of pocket
First month & ?? $814.28
 
The numbers don't seem to work for me. I come up with a payment of $404 which includes the 7% sales tax. What am I missing? Doesn't the cap cost reduction come off of the sale price so the net cap is $35314.25
 
Thanks

#105 of 173 Re: 2012 lacrosse touring [dwsindy] by jwilliams2

Jul 06, 2012 (7:25 pm)

Replying to: dwsindy (Jul 06, 2012 6:37 pm)
Yes, the cap cost reduction does come off the actual selling price to arrive at the net cap cost. I would ask what else is going into the payment number. Looks like there is somewhere around $1500 or so that needs explaining. Probably the acquisition fee plus??

#106 of 173 Re: 2012 lacrosse touring [dwsindy] by kyfdx HOST

Jul 07, 2012 (6:37 am)

Replying to: dwsindy (Jul 06, 2012 6:37 pm)
What your example doesn't show is the actual capitalized cost... That could include other amounts not shown. The acquisition fee comes to mind, at first glance...

#107 of 173 Re: Reconciling advertised lease payment with my own calculation [ksrp] by kyfdx HOST

Jul 07, 2012 (6:49 am)

Replying to: ksrp (Jul 06, 2012 5:00 pm)
Firstly, I want to understand how the capitalized cost was arrived at. Shouldn't the capitalized cost be 19550+795-1999 = 18346?. They are claiming it is 18440.
 
If $1999 is the due at signing, then it includes the first payment and you should only subtract $1800. BUT... what isn't disclosed is the actual selling price of the vehicle. In your assumption, you would be paying MSRP, which isn't good... Also, other additions to the CAP cost may not be disclosed, including the acquisition fee.. My guess? There is an acquisition fee of around $700, and the vehicle is discounted about $800 to arrive at that CAP cost
  
Also, I want to find the MF they are using. Here's my calculation from the $199 monthly payment. The depreciation payment is (18440 - 12004)/36 = 179. That leaves $20 for the interest, so (18440+12004)*MF = 20. That makes MF = 0.000657, so interest rate = 0.000657*2400 = 1.57%
  
Is this calculation correct?
 
Your math looks to be correct... Is the purchase option price the same as the residual? Usually it is, but not always... that could change the calculation... Most likely, you have it right.
  
Since total payments required is 7160 and each payment is 199, they are expecting 36 payments. Then why do they claim $1999 includes the first month's payment?
 
It's still 36 payments of $199..... paying other amounts at signing in addition to that ($1800) doesn't change what is actually being paid.. Just a legal disclaimer.
  
Lastly, what should I expect to pay for 'taxes, title and fees" in California?
 
Title/registration/document fees in California are roughly 2-3% of the purchase price, as a general rule of thumb... California taxes the monthly payment on leases.... So, if your local rate is 9%, then tax will be about $18/mo..
  
regards,
kyfdx

#108 of 173 Re: 2012 lacrosse touring [jwilliams2] by dwsindy

Jul 07, 2012 (7:02 am)

Replying to: jwilliams2 (Jul 06, 2012 7:25 pm)
Thanks for the reply. Yes the destination charge or acquisition fee is not there so that is probably it. I wish they would of just told me that up front but they seem to always be about the payment and that is it. And in such a big hurry to get me down in front of the business manager.

#109 of 173 Re: Reconciling advertised lease payment with my own calculation [ksrp] by delta737h

Jul 07, 2012 (8:10 am)

Replying to: ksrp (Jul 06, 2012 5:00 pm)
ksrp,
 
Some fund providers use an interest rate instead of a money factor. When I saw the $795 acquisition fee, I immediately thought of GMAC/Ally Bank who charges a $795 acq. fee. They also use an interest rate. So, here's my question: Who is the manufacturer? GMAC? I know that there are other providers that charge a $795 acq. fee, but I want to make sure whether this is a money factor lease or an interest rate before answering your question.
 
I assume thast the numbers and all terminology that you provided are correct.
For instance, you stated
 
"Payment based on capitalized cost of $18,440"
 
I have no idea what that means. Is that the selling price? Is that the gross cap cost? Is that the net cap cost? Frequently, dealers will erroneously use the term "purchase price" when they really mean "gross capitalized cost". So, there are a lot of questionable things here. For instance, I've assumed that the $18,440 is the net capitalized cost because that's the way most Ads disclose it.
 
Also,
 
"MSRP $19,550 plus destination charge of $795."
 
Just doen't make a bit of sense. Another thing that makes no sense is that the Ad states...
 
"Total payments of $7,160."
 
Makes no sense because 35 x $199 + $1,999 = $8,964
 
The $1,999 includes the first payment of $199. Obviously, there is a cap reduction of $1,800 and the 795 acq fee appears to be financed in the lease.
 
This Ad does not make one bit of sense. I think you need to double check it and ask some questions.
 
Can you provide a link to the manufacturer's website please?
 
Let me comment on your calculations...
 
The average monthly depreciation is actually $178.77... and the average monthly finance charge is $20.22... and so, the money factor works out to be 0.00066424372...
 
This is a rather strange-looking money factor because the money factor syntax takes the form 0.00XXX and, if rounded, amounts to 0.00066 which yields as payment of $198.87. Usually, the rounding of the money factor is not that extreme. And, although very close, I still get the feeling that this might be an interest rate lease. Another issue is that the residual factor amounts to 61.4% ($12,004/$19550) which is really strange. It should come out to a nice whole number. Something just isn't right.
 
John
TheAutoLeaseGeek

Messages Page 11 of 18

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