Posts Tagged ‘calculate car lease payment’

Video: How to Calculate Your Car Lease Payment

Saturday, January 7th, 2012

In this video, learn the secret formulas that dealers use in order to calculate car lease payments from start to finish. By learning the formulas that dealers use, you will fully understand what a lease payment consists of, which allows you to better negotiate a good deal on any future car leases.

How to Convert the Lease Money Factor into an APR Interest Rate

Wednesday, July 27th, 2011

When visiting a dealership for the purpose of leasing a new vehicle, you rarely hear the term “lease factor” being used by salesmen or managers. The lease factor or money factor can be defined most simply as a small decimal number that is similar to an interest rate. This small number is used to calculate your monthly lease payment. Now, you may be thinking, wait a second, how could there be an interest rate when I’m leasing/renting a vehicle? Aren’t interest rates used only when financing vehicles? Well, it turns out that a finance fee, which is calculated using the money factor, makes up a small component of your monthly car lease payment. The higher your money factor is, the more you will pay in finance charges/fees over the term of your lease. Your goal should be to obtain the lowest money factor possible.

Converting the money factor into its equivalent interest rate is very simple. All you need to do is multiply the money factor by 2400. This will give you the interest rate as a percentage. For instance, if the money factor for a certain lease deal is .0012, the equivalent interest rate works out to 2.88%.

The formula for converting the lease money factor into an interest rate is as follows:

Money Factor x 2400 = Interest Rate

Whenever you are at a car dealership for the purpose of leasing a new car, make it a habit to ask your salesmen about the money factor being offered for your lease deal. Then take this money factor and convert it into an interest rate to ensure that it is a fair deal. The converted interest rate for a lease should be close to the interest rates being offered on vehicle finance deals.

What Are People Who Lease a Car Paying For?

Saturday, June 5th, 2010

Many people who are interested in leasing a car often wonder what exactly they would be paying for every month if they were to lease a car. When you lease a car, the bulk of your monthly payment comes from the difference between the car’s selling price and its residual value. This is known as the vehicle’s depreciation. The other two smaller components of your lease payment include the finance charge and sales tax.

To sum up, you are paying for 3 things that make up your payment every month:

  1. Depreciation Fee
  2. Finance Fee
  3. Sales Tax

You can learn more about monthly car lease payments or calculating car lease payments by visiting the links found under “Car Lease Guide.”