[lumberjim]

Leasing


There are several factors that go into a lease calculation. the general theory is that you offset a portion of the vehicle;s value and pay the depreciated portion over a shorter term.

the way it works technically, is this:

you take the MSRP PLUS any package discounts that exist on the window sticker, and multiply by the residual percentage that the bank sets for the term and mileage requested.

ex:

Sticker Price: 30,000
package discount: 1,000
adj, msrp 31,000
residual 50%- 36 months, 12,000 mi. per yr
residual amt: 15,500

this sets one of the 3 major factors, the residual. at $15,500

the next factor is the "cap cost"

this is the negotiable portion, and should be negotiated seperately from payments.

cap cost is a result of the sale price less rebate or trade equity, plus the aquision fee if not paid "upfront"
ex:

sale price for the above vehicle: 28,000.
rebate -3,000
trade equity -1000
aqc fee +595(varies)
cap cost 24595


the 3rd factor is the money factor. this is like an interest rate.( they can be compared loosely by multiplying the money factor by 2400 ( .00335 X2400=8.04%)

so. you take the residual from the net cap cost and you have "depriciation"

ex 24,595
less 15,500
dep: 9,095
divide by term (36) = $252.64
that's one part of your payment

the other is the "rent charge"....which you get by multiplying the money factor by the sum of the residual and the net cap

ex: 24,595 + 15,500= 40,095 X .00335 = $134.32 this represents your monthly finance or rent charge

total base payment = $386.96
in PA, we tax the payment 9% =$34.83
total payment = $421.79 per month

this only leaves tags and the first payment due at delivery from the customer, so, in total, in this deal, you'd take about $570 out of your pocket, and have a payment of 421.79 for 35 more months, as you've already paid the 1st month. if you want to buy the car at the end, it's 15,500 plus any purchase option fee ( varies from bank to bank) and sales tax. If you just give it back, you will most likely owe a "disposition fee" and any charges for excess wear and tear.



that's how the math works.

knowing this, you can keep your dealer honest.

always always always negotiate each item seperately.

more in next post.....