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 youre
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.

Make assumptions and change some of the figures to see how it affects your
lease payments. For instance, residual value is an estimated value of what
the vehicle will be worth at the end of the lease. You can input different
estimates to cover different scenarios and assumptions.

As a final note of caution, bear in mind that lease calculators only do
calculations and check the accuracy of abstract mathematical formulae. They
do not tell you whether a lease is good or bad.

Using lease calculators is a post from: Auto Blog | ap-rasc07.org

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 vehicles 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 cars 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. Thats 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).

As you can see, residual values are a key factor in determining how much
money to pay on your lease and the higher the residual value, the lower
your monthly fees. This works in reverse if you build a bond with your car
and decide to purchase it at the end of your lease. If we stick with the
same example above, the lower monthly payments in the second scenario come
at the cost of paying substantially more to buy your car at the end of the
lease.

So, since the residual value is so important, how do I know which one is
best for me? Well, it all depends whether you want to purchase the car at
the end of your lease. If you dont want to make a large down payment and
you want low monthly payments, then a car that holds with a higher residual
value is a good deal. If you are thinking of purchasing the car at
lease-end, then you need to balance low-monthly payments with a moderate
residual value.

The residual value of leasing is a post from: Auto Blog | ap-rasc07.org

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.

Single-payment leases are devised with spendthrifts in mind: no cycle of
monthly payments, a new car every two to three years and no interest in
purchasing the vehicle at the end of the lease. You should only consider
this type of lease if you are concerned about not being able to make monthly
payments and have a lot of cash upfront.

Single-Payment Lease is a post from: Auto Blog | ap-rasc07.org

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

Higher-tech options and other cutting-edge features do not necessarily mean
the car will fare better. By the time your car is two years old, better
and cheaper systems will render the laser-guided cruise control, navigation
systems and built-in cell phone obsolete. Look for functional features,
such as automatic transmissions, power windows and wheel-drive to enhance
the vehicles value in the used-car market.

Used-car buyers view less favorably luxury vehicles that come with big
incentives. These are perceived as questionable in quality and
reliability.

Luxury Cars and Resale Values is a post from: Auto Blog | ap-rasc07.org

Credit score is a measure of your credit worthiness used by leasing agents
to determine whether you are eligible for a lease. You credit score is
based on your past and present credit history, and can range anywhere from
350 to 850. A measure above 720 is considered a prime score and will
land you the best rates. If you are below 640, then you are sub-prime
and will be considered bad rating by the bulk of leasing agents. This is
where all the trouble in getting that lease comes from.

Ask for your FICO Credit Score from the Fair Isaac Corporation (FICO)
which details your credit score held by all three leading credit score
agencies in the country. Compare the three credit scores and determine if
any agency is holding erroneous credit data about you. Contact the
reporting agency and getting corrected.

If there are no mistakes in your credit report, then you can take some
steps to maximise your score to go above the threshold of 640. Pay your
bills on time and pay down any credit card debts you have. Do not take any
new accounts as this might increase the likelihood of you getting into bad
credit thus worsening your credit score.

Leasing with bad credit is a post from: Auto Blog | ap-rasc07.org

As with new car-leasing, your price research should focus on the key
figures that are the initial market value and the estimated residual value
of the used car. This is harder to predict since there is no factory-set
sticker price on used cars, and the residual percentage is very much pegged
to a subjective current retail value. Use different sources to get a rough
idea of the value of the used car: your local dealerships, internet
car-evaluating tools, such as Edmunds.com and Cars.com, to name but a few.
Another way to pin down a good estimate is to compare the lease on your
given car to a lease on a new-car with the same make and model. This should
give you a better picture of the difference between leasing new and going
for used. Just like leasing a new car, used vehicle leasing is more
attractive when residual values depreciate the least. You stand a better
chance of finding a bargain in the high-end, luxury vehicles that keep
their values better as used cars.

Next, you need to check the initial mileage and the overall vehicle
condition. The maximum mileage on a used car should be no more than 12,000
miles a year. A 3-years old car with 50,000 miles on the clock is very
unlikely to make a good used-vehicle lease. Check for signs of excessive
use, like worn seat fabric, worn pedal pads and dirty engine, which might
indicate that the odometer has been rolled back. If the car is not
certified, you need to get it thoroughly inspected. Ask your dealer for a
manufacturer-sponsored certification program or have your car certified by
a qualified mechanic or inspection service.

Most used-car deals dont come with gap coverage. This is a special type
of coverage, normally offered on a new auto-lease, to cover the consumer if
the leased vehicle is lost, stolen or damaged. Typically, auto-insurance
policies cover only what your car is worth at the time of loss, not what
you still owe on the lease. The difference could run into thousands of
dollars. For peace of mind, do not enter into any used-car lease without
gap-coverage. Arrange it separately with either the lease dealer or your
auto-insurance company.

Leasing used cars explained is a post from: Auto Blog | ap-rasc07.org

Acquisition fee: A fee charged by a leasing company to begin a lease. Not
all leasing companies charge an acquisition fee but if charge it starts at
about $300 and is seldom negotiable.

Capitalised cost: The total selling price of the leased vehicle This also
accounts for taxes, title, license fees, acquisition fee and any optional
insurance and warranty items you elect to fold into the lease and pay
overtime rather than upfront.

Depreciation fee:
Forms part of the monthly lease payment charge and accounts for the loss
in the value of the car at the end of the lease. The vehicles list price
minus the expected residual value at lease end is divided by the number of
months in the lease to give the depreciation fee. Suppose you decide to
lease a vehicle with a retail price of $23,500. The leasing company
estimates that after a three year lease, the vehicle will be worth 35% of
its original retail value, or $8,225. The difference, $15,275, divided by
the number of months in the lease, 36 months, gives us the depreciation fee
($424)

GAP insurance Pays off the lease balanced if the vehicle is wrecked, stolen
or totalled.

Inception fees any fees that are due at the beginning of a lease. These
typically include a security deposit, acquisition fee, first monthly
payment, taxes and title fees.

Mileage allowance The maximum number of miles a leased vehicle can be
driven a year without incurring an excess mileage penalty. A typical
mileage allowance is 12,000 to 15,000 miles a year, although this is
negotiable with your leasing company.

Mileage charges a penalty that you incur if you exceed your mileage
allowance on a leased vehicle. Typical mileage charges are 10 to 20 cents
per excess mile.

Money-factor A fractional number, such as 0.00043, used in calculating your
monthly lease payments. You can get a rough estimate of the annual
percentage rate on your lease by multiplying the money factor by 2,400. If
a dealer quotes a money factor such as 3.4 than you can get the equivalent
APR, 8.16, if you multiply by 2.4.

Residual value Residual value is the amount of money the leasing company
says your leased vehicle will be worth when your lease ends. Higher
residual values lead to lower monthly payments but higher lease-end
purchase cost if you decide to keep the vehicle.

Security deposits an up-front amount that your leasing company required at
the beginning of a lease to safeguard against non-payment. This is
generally refundable at the end of your lease.

Termination or Disposition fee The amount you have to pay the leasing
company at the end of your lease if you decide not to purchase the vehicle.

Wear-and-tear charges Extra charges you have to pay at the end of your
lease for any wear and use the leasing company considers above normal

Leasing Glossary is a post from: Auto Blog | ap-rasc07.org

The leasing contract stipulates that you make regular, monthly payments
over your lease term. The credit score you lease company requests
identifies how likely you are to make such payments. It is simply a number
calculated according to a model that takes into account your payment
history, any amounts you owe and credit currently in use.

It is very important to keep a good credit-score, usually above 700, to
qualify for a lease or any other lending decision. Start by ordering your
credit report from Fair Isaac Corp, the company that creates your credit
score. If erroneous data is held about you, then contact the creditor
responsible and get such information corrected.

Your payment history is the single most important factor in determining
your credit score, so get in the habit of paying everything you owe on time
and keep the balances low in your credit cards.

Leasing and your credit score is a post from: Auto Blog | ap-rasc07.org

Trading a lease is the best option for people who want to terminate a lease
early and dont want to pay the large termination imposed by most lease
agents. It can also be an alternative to get out of a lease for far less
than you would otherwise pay your original lease company for extra mileage
and wear-and-tear charges that can run into the thousands of dollars.
For a small fee, you can advertise your car lease for assumption to a large
number of potential buyers on the look-out for leases on the Internet. Such
services include LeaseTrader.com, the originator of online lease-trading
and the biggest online marketplace where most lease transfers take place,
and smaller marketplaces such as BreakAlead.com and TradeAlease.com

Before swapping your lease, make sure your leasing company approves lease
transfer transactions. Caution must be exercised in choosing a lease
swapping service: make sure they facilitate the whole lease transfer
process, offer online or telephone customer-service help and registered
buyers undergo stringent credit checks.

Lease Trading is a post from: Auto Blog | ap-rasc07.org

Well, no quite! When you lease a car, youre only using the car over a
specified period of time with the option of buying the car. The residual
value represents the loan balance at the end of the lease. If you add it
to the capitalized cost and divide by two, youll get the average
capitalized cost outstanding over the lease term. Let us suppose youre
leasing a car with a capitalized cost of $25,000 and a residual value of
$15,000. You average balance over the lease term, irrespective of how long
it is, is $20,000 the sum of the two divided by two -.
Using this sum works because the money factor is the annual interest rate
devided by 24, rather than 12.

Continuing with our example and assuming an
interest rate of 6% APR:
$30,000 X (6 per cent / 24) = $75
(Capitalized cost + residual value) X (interest rate / 24) = Monthly
finance charge
This finance charge is added to the depreciation charge to calculate the
monthly payments on your lease.

Lease Financing is a post from: Auto Blog | ap-rasc07.org