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.