A Lease Payment Calculator Will Let You Know How Much You're Spending

Car leasing can be a wonderful experience and if you are planning to lease out a used car or a new car, you better brush up your grey cells. You should start by getting a rough idea about auto leasing and the car leasing payment for the new car you are planning to acquire.

It might seem like an uphill task to calculate an auto lease payment. But given some basic expertise in Excel or the pocket calculator, it would be ready in a jiffy. The website Edmunds.com has created a lease calculator that does your job really fast.

Some buyers like to work the auto/car lease payment numbers themselves, so we are providing a formula for calculating car leasing payments. The calculations shown here can be done using a calculator. Or, better still, create an Excel spreadsheet to make the calculations automatic. This will be a valuable tool in saving money when you go for a car or auto lease.

But keep in mind that calculating a car lease payment is nearly impossible when the manufacturer has subsidized the lease. You may want to calculate a bottom-line car lease that represents the very best deal you could get.

To get the car lease payment figure, you would require many figures like:

1. MSRP of the vehicle: This can be researched by looking at sites like Edmunds.com and NADAGuides.com, etc.
   
   
2. The money factor: This is the rate of interest your auto lease is based on.
   
   
3. Lease Term: For warranty coverage, take a 3-year car leasing
   
   
4. Residual value of the car: Call your bank or the auto dealer to find out the residual value. It would normally be between 50-58% for a 3-year lease.

Car Leasing – How to calculate a lease payment?

In this example, a vehicle with a sticker price of $23,000 has been chosen. The negotiated price is $20,000. Assume the interest rate is 9% and the residual value is 56%. What would be the monthly payments on a 3-year auto lease?

Find out the value of the car, the actual worth of the car down the line.

The value = $23,000 X 56/100 (56%) = $12,880

Hence the car would be worth $12,880 after 3 years. The negotiated price was $20,000 and it will be worth $12,880. You are using the car's value of $7,120.

$20,000 - $12,880 = $7,120


This value, $7,120 is then broken into 36 monthly installments of $197.70.

This figure does not include interest or tax. To find out interest on the lease:

($20,000 + $12,880) X 0.0037 (money factor) = $121.56


Add the two figures: $197.7 + $121.56 = $440.91 --> This figure gives you the approximate bottom-line monthly lease payment.

This figure does not include taxes. The figure also does not take into consideration any down payments or upfront money like rebates or incentives. The amount of tax you are required to pay for the car leasing is:

Assuming your car leasing is done in California, with a sales tax of 8.25%: $440.91 X 0.0825 = $36.37.

The car/auto lease monthly payment is now $477.28!

An easier way to calculate your lease payments is to use the lease payment calculator from Edmunds.com.