Calculate Your Own Car Lease Payment | Edmunds
|edmunds.com 17 Sep 2019 at 17:57|
The average cost of a car lease in the second quarter of 2019 was $458, according to Experian s State of the Automotive Finance Market report. The figure is illustrative of increasing vehicle prices and car loan-level payments. But how does one translate this average into a monthly payment that applies to your next leased car?
For some shoppers, leasing is as dark and mysterious as the deepest reaches of outer space. It s full of confusing language, weird fees and payments that seem impossible to figure out at home without an advanced degree in mathematics. The truth is you don t have to be an astrophysicist to calculate your out-of-pocket costs. Figuring out your own monthly payment from home can be easy. All you need is a calculator, some deal info, and a little guidance.
But first, some advice. While you can certainly calculate your own lease, there are easier ways to estimate what your monthly payment could be.
Your first stop should be our Incentives and Rebates page. Here you can find carmakers lease specials with very attractive monthly payments. We also suggest checking automaker and dealership websites to see lease offers, which tend to change monthly.
Another valuable resource is the Edmunds Car Lease Calculator . You will need some information to get an accurate quote, but our calculator will do the math for you. It also pulls in purchase price information about current models and local tax rates.
Perhaps the easiest way to get an idea of what a lease should cost is to obtain real-world lease quotes from multiple dealerships. With three to five quotes in hand, you can quickly get a feel for a good deal.
If after checking out all these other options you are still determined to calculate your own lease payment, we re happy to help.
And because we know that people process information differently, we will present the formula to you in two different ways.
Calculating your own lease payment to the penny is unrealistic: Taxes and fees will vary by region, and add-on fees can vary from brand to brand. And no matter how hard you try, you re almost guaranteed to leave some fees out of the equation. But you can get pretty close.
Some of that data you need will be available here on Edmunds. But other information you ll need to collect from a dealership. A simple email to a fleet manager or sales manager should be all it takes to get started.
1. MSRP (aka the sticker price) of the vehicle. You can find the MSRP for virtually any new car here on Edmunds. Be sure you re getting the MSRP for the exact package of the car you intend to lease.
2. The money factor. This is the "interest rate" you ll pay during your lease. It s sometimes called a lease factor or even a lease fee. To get the money factor, call or email a dealership that sells that brand and be specific about the model you re considering: Money factors may not be the same for all models. Money factors look different from their annual percentage rate (APR) cousins — usually something like this: 0.00125. Here s a handy tip: To convert interest rates to money factors, divide the interest rate by 2,400. To convert money factors to interest rates, multiply by 2,400. So 0.00125 x 2,400 would equal an interest rate of 3%.
3. Lease term. We recommend leasing for 36 months or less. However, some lease specials are for 39 months or 42 months. These terms shouldn t be deal-breakers. Just know that you will end up paying an additional year of registration fees if you opt for a lease that is longer than 36 months. Also, be sure to check the vehicle warranty. Many "bumper-to-bumper" warranties end at the 36-month mark.
4. Residual value of the car. Ask the dealer for the residual percentage of the car you re considering. The dealership will likely ask how many months you plan to lease and how many miles you plan to drive per year. These factors affect the residual percentage. As a rough guide, most cars have a residual value of between 45% and 60% for a 36-month lease. Again, be certain the residual amount you request is for the exact package of the car you ll be leasing.
5. Fees. These are registration, acquisition, down-payment tax (if any), documentation fees, and the like. If you re unable to get an exact figure for the fees you ll have to pay, ask the dealer for a rough estimate.
6. Rebates. Without factoring in applicable rebates, your calculations will be off. If you re not sure what rebates are available, don t forget to check our Incentives and Rebates page.
To best explain the calculation steps, we are going to create a sample lease.
For our example, we are going to lease a car with an MSRP of $23,000. This car will have a residual value of 57% and a money factor of 0.00125. We will have a $1,700 down payment, and the car will have a $500 rebate. Assume we ve negotiated a sales price of $21,000 (before the rebate is applied) and will have $1,200 in various fees. For this example, we will not have a trade-in.