Car Leasing 301 - Car Lease Calculator

Monthly Car Lease Payments Cont...

6. Calculate your Residual Value.

1. Here we figure the lease-end residual value, or percentage, for your car. The residual value is an estimate of your cars wholesale value at the end of the lease agreement or term. The higher the value, the lower the monthly payments. The residual values are often set by the lease companies, therefore you’ll need to get this value from the dealer or the lease company.
2. Ex. Your car will be worth $15,000 once you’ve fulfilled your lease agreement.

7. Figure out your ‘Money Factor’

1. The Money Factor (define: money factor) is expressed as a smaller number, and determines the lease finance charges in your lease. This rate is not disclosed in your lease agreement, however your agreement will show all financial charges expressed as ‘Lease Charge’ or ‘Rent Charge’. It may be expressed as: .00352.
   To calculate, divide your rent charge by the number of months in your vehicle lease. Take this number and divide by the total of the Cap Cost (define: Cap Cost) and Residual to get your Money Factor.

8. Vehicle Term – What is the length of your car lease term?

1. A lease term will be expressed in months. Ex. 24, 36, 48 months. Typical terms are 24 (2 years), 36 (3 years), 48 (4 years). Sometimes different terms are accepted from the standard. Remember, when you lease a car and considering the vehicle lease term on the agreement, always consider the manufacturers warranty on the vehicle. If the warranty expires you will be subject to pay those repair bills at your own expense.

9. Sales Tax – That’s right – tax, tax, tax, you can’t get away from the tax man.

1. As with new car sales, leased car agreement also come with a tax. Each tax may vary however from province to province, state to state, and is dependent upon the area you live. For our example sake, let’s use 7.5% as the sales tax. With most areas, the sales tax is already calculated in your monthly payments – however some areas will require the sales tax to be paid up front.
   For example, if your monthly payment is $250.00 and your sales tax rate is 7.5%, then you’ll be paying $18.75 in taxes for a monthly vehicle lease payment cost of $268.75 ($250.00 + $18.75)

Part I: Car Lease Calculator Example