Want to calculate your monthly lease payment? Consider using a lease
calculator

If you are considering a car lease, then you might want to know some key
figures involved in the deal: the monthly lease payments, the overall cost
of the lease and how much savings can be made compared to purchasing the
vehicle.

A lease calculator relieves you from the stress of having to know the
complex underlying lease formulae used in calculations. You simply plug a
number of figures into the calculator and hey presto! You get a detailed
rundown of detailed payments, taxes and total lease costs.

Figures you need to get from your dealer about a specific lease you’re
interested in include: capitalized cost, estimated residual value at the
end of the lease, the number of months in your lease and the money factor.
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If you are in the market to lease a vehicle, you will hear the term
“residual value” recur like a leitmotif. A residual value does not only
affect your monthly payments, but is equally used by leasing companies
to determine any penalties should you break your lease early and how
much to pay if you decided to buy the vehicle at the end of your lease.

Let us first start by looking at the meaning of residual value. The
term “residual value”, refers to the value of something after it has
been used for some time. In leasing lingo, it refers to the
depreciation of the vehicle’s value over the life of its lease.
So how does it exactly affect your monthly payments? When you lease a
car, you pay for the car’s value that you use over the lease length.
Suppose you leased an $18,000 car for 2 years: the leasing company
needs to estimate the value of this car in two years time in order to know
how much of the car you will be using during your lease term. That’s where
the “residual value” comes into the equation. If the residual value is
estimated to be $13,000 at the end of your lease, then your monthly
payments will be calculated on the $5,000 you will use over 24 months,
giving an average monthly payment of $208.3 (plus interest, tax and fees).
How about if the car is expected to lose half its value over the same
period? In this scenario, you will be using $9,000 over the same period,
leaving you with a higher monthly payment of $375 (plus interest, tax and
fees).
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A prepaid lease is a new type of lease which has made its foray into the
market in recent times. In this lease, consumers forego the cycle of lease
payments if they make a large payment at the beginning of the lease.

There are two amounts in a conventional lease that incur charges and
determine your monthly lease payments. First, there is a depreciation
charge which accounts for the value the car loses during the lease term.
Second is a residual amount which is the projected value of the vehicle at
the end of the lease. The sum of these two charges gives the monthly
payments on your lease.The idea behind a pre-paid lease is to eliminate the
finance charges for depreciation and only account for residual value
charges in a single, pre-paid payment at the beginning of the lease.
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When it comes to ultra-luxury, high-end vehicle leasing, there is no doubt
that the best deals are those cars that hold their value. With this in
mind, we single out a few truths about residual values that consistently
apply to high-end leasing.

The most determining factor when it comes to resale values is public
perception of the brand, not its reliability ratings in quality surveys.
Take the Jaguar for example: it is consistently rated as a quality car, but
because of questionable reliability perception among the public, it takes a
sharp dip in value at the end of its lease-term
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