How To Calculate Your Lease Payment

| Total Words: 410

Understanding how to calculate your monthly lease payment makes it easier for you to make an informed decision. Yet, most of us shy away from the complicated math on our lease contract, leaving it up to the dealer to do the payment formula.

Actually, its not that difficult! Once you understand all the figures involved in calculating your monthly payments, everything else falls into place. These key figures are:

MSRP (short for Manufacturers Suggested Retail Price): This is the list price of the vehicle or the window sticker price. Money Factor: This determines the interest rate on your lease. Insist on your dealer to disclose this rate before entering into a lease. Lease Term: The number of months the dealer rents the vehicle. Residual Value: The value of the vehicle at the end of the lease. Again, you can get this figure from the dealer.

Now, let us calculate a sample lease payment based on a vehicle with an MSRP (sticker price) value of $25,000 and a money factor of 0.0034 (this is usually quoted as 3.4%). The scheduled-lease is over 3 years and the estimated residual percentage is 55%.

The first step is to calculate the residual value of the...

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