Here are the mechanics of how to calculate your own lease, without a lease calculator. Understanding the formula comes in handy when you are at the dealership and do not have access to internet or a computer with a lease calculator. It’s pretty useful if you want to cross-check the dealers math.
What you need:
- MF: The Money Factor. (You can find out what your interest rate is by multiplying the money factor by 2400)
- RV: Residual Value. What the car is worth at lease-end.
- CC: The Capitalized Cost AKA Sale Price.
- LST: Local Sales Tax.
- M: Term of the lease (24,36,48,etc)
I am going use the latest quote I got for the G37 I was shopping for as an example.
Step 1: Monthly Depreciation Charge
(CC – RV) / M
(32,916 – 22,185) = 10,731 / 36 = $298.08
Step 2: Monthly Finance Charge
(CC + RV) * MF
(32,916 + 22,185) = 55,101 * 0.00186 = $102.49
Step 3: Total Monthly Charge (plus tax)
(Monthly Depreciation Charge + Monthly Finance Charge) * LST
(298.08+102.49) = 400.57 * 1.0825 (8.25% tax) = $433.62
The actual quote I got is $453 a month. Why the $20 difference? Because they rolled in the Acquisition fee (bank fee) of $595 into the Cap Cost of the car. So keep that in mind next time you lease. Its probably better to pay that upfront. Otherwise, that $595 ends up costing $720 after all is said and done.
Hi G – was able to negotiate the below at Tier 2 Credit.. not sure of the details MF residual etc..
2013 G37x Premium w/Nav
39 mos 15.000/year
$1,800 TOTAL out of pocket
$400/month
4 remaining payments wiped off ($405)
What do you think? Could do better?
Thanks!
2013 Buick Enclave Premium package w/ nav.
39month lease w/ 18000 miles per year
had a trade in worth 16500, owed 9446.66
net trade-in value 7053.34
Gross Cap cost: 47936
adjusted cap cost: 37744
Rebates: 4030
Residual value: 23654.30
O money down at signing
428.21 with tax included per month…1st month payment included in deal.
Is this a good deal? It was the best price we got & we went for it.
Omh, I can’t really confirm how good the deal is because there is no MF. I also don’t know the your tax rate. If I had to make an educated guess, I think you did good, specially because you are getting a significant amount of miles on this lease.
I don’t understand why RV is added to CC in calculating the finance charge. Aren’t we just borrowing the value of the car (CC)? In fact, since the value of the car is depreciating, it seems like we should use the depreciated value each month.