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results that will help you identify it if you have printed out several
versions of the calculator.
Copy all the values you
have set up for the lease to the corresponding loan fields. This is the
quickest way a get head-to-head comparison of a lease and loan for the
same vehicle.
When checked, whatever values you
enter in one side will automatically be entered in the other side,
keeping everything in sync as you go.
Copy all the values you
have set up for the loan to the corresponding lease fields. This is the
quickest way a get head-to-head comparison of a loan and lease for the
same vehicle.
The name of the vehicle you want to lease or buy.
The name of your potential
leasing company or lender. Dealerships usually have a leasing company
or lender they automatically process leases or loans through. You do
not have to use the dealership's leasing company or lender. You are
free to shop around and find the best leasing company or lender for
you. (Your bank or credit union, for instance, may offer lower interest
rates or lease fees.) This field is not required but may help if you
are comparing several leasing companies or lenders.
The Manufacturer's Suggested Retail Price (
not the price you hope to pay) for the vehicle you want to lease or buy. Click the link icon (
),
if available, to bring up a website and look up the MSRP. It's
important to have an accurate MSRP when leasing because 'Residual
Value' is based on MSRP, not the price you actually pay.
The price you have
negotiated (or hope to negotiate) for the vehicle you want to lease or
buy. A good starting point for negotiating a vehicle price is to know
the vehicle's invoice price, then offer something reasonable above
that. Reasonable offers might be $300-$500 over invoice for vehicles
with an MSRP up to $25,000, $500-$1,000 over invoice for vehicles up to
$40,000 MSRP, and $2,000-$3,000 over invoice for vehicles over $40,000
MSRP. Use the link icon (
),
if available, to bring up a website and look up the invoice price (it
may even show an average price that buyer's of this car are actually
paying).
Lease: Also known as
base capitalized (or cap) cost.
Lease prices are negotiable just as new car prices are, and if your
dealer or salesman tries to tell you price is not negotiable when
leasing, find a new dealer! 'Negotiated Price' has the biggest
influence when calculating your monthly payment.
Any dealer (or manufacturer)
rebate or matching down payment amount you plan to apply as a down
payment to reduce your loan or lease amount.
Any cash amount you plan to apply as a down payment to reduce your loan or lease amount.
Any vehicle trade-in amount you plan to apply as a down payment to reduce your loan or lease amount.
Any other amount that would become part of the down payment to reduce your lease or loan amount.
Lease: Also known as capitalized cost (or cap cost) reduction.
Total
of the above 'Cost Reductions'. Only include amounts that will reduce
the lease or loan amount. Click the '-' icon for this section to
collapse the detail and just enter a lump sum value for 'Total Cost
Reductions'.
Lease: Also known as capitalized cost (or cap cost) reduction.
Enter
the total of any costs that will reduce the lease or loan amount, like
down payment, trade-in value, and dealer rebate. Click the '+' icon for
this section to expand the detail and let you enter values for
individual reductions.
Any unpaid loan balance you still owe on the vehicle you intend to trade in.
The cost to purchase or transfer tags or license plates for your new vehicle.
The cost to have the title of your new vehicle transferred to its new owner (probably the leasing company or lender).
The fee charged by your state and/or county to have your new vehicle legally registered.
Lease only: Sometimes called a bank fee.
An administration fee (usually $250-$900) set and charged by the lease
company, similar to points for a mortgage loan. High-end luxury
vehicles have higher acquisition fees. It is becoming more common and
is standard practice for some dealers to increase this fee themselves
to increase their profit margin. If you don't see this fee mentioned in
your lease contract ask about it specifically. If it's out of the
normal range ($250-$900) it has probably been increased by the dealer
and you may be able to negotiate it lower.
This amount will normally be blank (or zero) since you probably will pay for auto insurance directly to the insurance company.
Lease: If your lease does not include gap protection or gap insurance,
(most recent lease contracts do include this, but be sure to read the
fine print), you should request it and enter that additional cost here.
Gap protection covers any additional amount you may still owe, beyond
what your insurance company pays, in the case of a totaled or stolen
vehicle under lease. It is strongly recommended and very important for
any leased vehicle to have gap protection coverage.
If you have chosen coverage
through an extended warranty, and that premium is to be financed into
your lease or loan, enter the cost here.
Undefined
Any other amount (i.e.
up-front sales tax or a luxury tax amount) that would become part of
the financed costs, increasing your lease or loan amount.
Total of the above
'Financed Add-on Costs'. Only include amounts that will increase the
lease or loan amount, do not include amounts you will pay as part of
up-front costs. Click the '-' icon for this section to collapse the
detail and just enter a lump sum value for 'Total Financed Add-on
Costs'.
Enter the total of any
costs that will increase the lease or loan amount, like trade-in
balance, tags/plates, title, registration, lease acquisition fee,
insurance costs, and extended warranty. Click the '+' icon for this
section to expand the detail and let you enter values for individual
add-on costs.
Lease: Your lease amount. The negotiated price minus cost reductions plus financed add-on costs gives the actual lease amount.
Loan:
Your total auto loan amount once 'Sales Tax' and 'Total Financed Add-on
Costs' are added and 'Total Cost Reductions' is subtracted.
Lease: Also known as lease term. How long you plan to keep the leased vehicle. Also choose whether 'Length of Lease' is years or months.
Loan: How long you will pay on this loan. Also choose whether 'Length of Loan' is years or months.
Sometimes called
lease factor.
The money factor is the way interest is charged for leases. The money
factor is expressed as a very small decimal number, like .00259. Don't
confuse money factor with interest rate, as some dealers intentionally
try to do. A money factor of .00259 is
not an interest rate of
2.59%! However, money factor is directly related to the interest rate
you will pay. In fact, you can estimate the interest rate by
multiplying the money factor by 2400 (always use 2400 no matter what
the 'Length of Lease' is). So a money factor of .00259 x 2400 = 6.21%
as an approximate annual interest rate. If you don't know your lease's
money factor, leave 'Money Factor' blank and enter 'New Car Interest
Rate' instead and the money factor will be calculated for you or click
the link icon (
), if available, to bring up a website and look up the money factor for your car.
Lease: If you
don't know the money factor for your car, enter the current interest
rates for new car purchases and 'Money Factor' will be estimated by
dividing the interest rate by 2400. If the new car interest rate is
6.99%, divide that by 2400 = money factor of .00291.
Loan: The annual percentage rate you will pay for this loan.
You can look up current new car interest rates on the web. Click the link icon (
), if available, to bring up a website and look up the current auto loan interest rates.
Lease: The
wholesale value of a car at the end of the lease. Residual value is
really what makes lease payments less than typical auto loan payments.
The best cars to lease have a 24 month residual value of at least 50%.
(Vehicle residual values vary greatly so make sure you look it up.)
With a lease you essentially pay for the anticipated depreciation
amount of the car over the 'Length of Lease' plus interest and sales
tax, then you give the car back or pay 'Residual Value' and buy it.
Residual values are often stated only as a percentage of MSRP. If you
see your residual value stated as a percentage, leave 'Residual Value'
blank and enter the percentage in the 'Percent of MSRP' field, then
residual value will be calculated for you. If you need to look up the
residual value or percentage, click the link icon (
), if available, to bring up a website and look up the vehicle's residual value or percentage.
Loan:
How much the car may be worth at 'Sell After' time. If you plan to sell
within about 5 years, you can probably enter the residual value as if
you were leasing. If your 'Sell After' time is longer than 5 years you
can get a good estimate by finding used car values for the make and
model (or similar), choosing a model year that makes it the same age as
your 'Sell After' years. (For example, if my 'Sell After' time is 8
years and it's currently 2006, I'm going to look up the resale value
for model year 1998.) If you need to look up used car values, click the
link icon (
), if available, to bring up a website and look up used car values.
Lease: The percent
of MSRP the car is worth at the end of the lease. Residual values are
often stated only as a percentage of MSRP, so if you know the
percentage enter it here and 'Residual Value' will be calculated. You
can look up residual values or percentages by clicking the 'Residual
Value' link icon (
), if available, to bring up a website and look up the vehicle's residual value or percentage.
Loan:
The percent of MSRP the car may be worth at 'Sell After' time. If you
plan to sell within about 5 years, you can probably enter the residual
percentage as if you were leasing. If your 'Sell After' time is longer
than 5 years you will need to have some other basis for estimating the
resale percent, or enter a resale value instead.
The percentage of
sales tax your state charges on leased or purchased vehicles. Also, if
your state has a maximum amount of sales tax on vehicles, enter that
amount as the 'Maximum Sales Tax'.
Lease: Sometimes called usage tax.
Sales tax on auto leases can get very complicated and varies from state
to state. This calculator uses the most common method of calculating
auto lease sales tax, which is to apply the sales tax percentage to the
'Monthly Depreciation Fee' + 'Monthly Lease Fee' and include sales tax
in each monthly payment. Note: If your state charges sales tax up
front on vehicle leases, include that amount in 'Financed Add-on Costs'
and leave 'Sales Tax' percent and maximum blank.
Loan:
The sales tax amount will be calculated from the percent or the maximum
sales tax amount and will be added to 'Loan Amount'. If sales tax is
not to be financed, enter it as a 'Cost Reduction' and enter zero here.
If your state has a maximum amount of sales tax on vehicles, enter that amount here.
Lease:
If the 'Sales Tax' percentage goes over this 'Maximum' amount, the
maximum sales tax will be divided by the number of lease payments and
the resulting amount will be included in each monthly payment.
Loan: The 'Sales Tax' amount will either be the amount calculated from the sales tax percent or the 'Maximum' entered here.
How long you plan to keep your vehicle. Also choose whether you'll sell after this many months or years.
Lease: Your monthly lease payment, made up of the depreciation fee, lease fee, and sales tax.
Loan: Principal and interest to be paid each month.
The real cost each
month to lease or own your car is more than just the monthly payment
amount. When deciding whether to lease or finance your next car, 'Real
Monthly Cost' is far more important than 'Monthly Payment'. 'Real
Monthly Cost' has calculated how much it actually costs each month
(excluding gas and maintenance) by starting with your 'Total Payment'
then adding back in your down payment, trade-in value, and subtracting
out any 'Resale Value'. The final step is to divide this 'Actual Total
Cost' by the number of months in your lease or the number of months you
plan to keep the car ('Sell After' months).
The amount of money you will pay each year for this lease or loan.
The real cost each
year to lease or own your car. See the help for 'Real Monthly Cost' for
more information on how this amount is calculated and how to interpret
it when deciding whether to lease or finance your next vehicle.
Lease: Similar to
the loan amount in a traditional loan. This is basically the amount you
need to pay back plus interest (lease fee). The net capitalized cost
minus the vehicle's residual value at the end of the lease is the
amount the leasing company is 'loaning' you.
Loan: Your
total auto loan amount once 'Sales Tax' and 'Total Financed Add-on
Costs' are added and 'Total Cost Reductions' is subtracted.
Total amount of interest you will pay over 'Length of Loan'.
The total of monthly payments for the entire lease or loan.
The real cost of
your lease or loan has to consider the amount you paid as a down
payment, the value of any vehicle you traded in, and the value you can
get when you sell or trade in this vehicle when you're done with it.
The number of payments you will make to pay off the loan.
Each month you pay an equal
portion of the total expected vehicle depreciation. The depreciation
fee is to pay the leasing company for the vehicle's loss in value over
the length of the lease.
Sometimes called finance fee.
The portion of your monthly payment that covers the lease fee. The
lease fee is the way the leasing company charges interest for the use
of their money. However, the lease fee is not amortized as interest is
in a traditional loan. The formula has been simplified then figured
into each payment equally throughout the lease.
The amount of sales tax you pay each month. Sales tax is paid on the depreciation fee plus the lease fee.
Down Payment + Trade-in Value + Dealer Rebate + Other Reductions
$5,450.00 = $1,500.00 + $3,200.00 + $750.00 + $0.00
Trade-in Loan Balance + Tags + Title + Registration + Lease Acquisition Fee + Insurance Costs + Extended Warranty + Other Costs
$2,400.00 = $1,300.00 + $150.00 + $175.00 + $325.00 + $450.00 + $0.00 + $0.00 + $0.00
Negotiated Price - Total Cost Reductions + Total Financed Add-on Costs
$21,800.00 = $24,850.00 - $5,450.00 + $2,400.00
Monthly Depreciation Fee + Monthly Lease Fee + Monthly Sales Tax
$334.07 = $204.17 + $110.99 + $18.91
Real Total Cost / Length of Lease (months)
$529.90 = $12,717.68 / 24
Monthly Lease Payment * 12 Months
$4,008.84 = $334.07 * 12
Real Monthly Cost * 12 Months
$6,358.84 = $529.90 * 12
Negotiated Price - Total Cost Reductions + Total Financed Add-on Costs - Residual Value
$4,900.00 = $24,850.00 - $5,450.00 + $2,400.00 - $16,900.00
Monthly Lease Payment * Length of Lease (months)
$8,017.68 = $334.07 * 24
Total Payments + Down Payment + Trade-In Value
$12,717.68 = $8,017.68 + $1,500.00 + $3,200.00
24
Lease Financed Amount / Length of Lease (months)
$204.17 = $4,900.00 / 24
(Net Capitalized Cost + Residual Value) * Money Factor
$110.99 = ($21,800.00 + $16,900.00) * 0.002868
(Monthly Depreciation Fee + Monthly Lease Fee) * Sales Tax %
$18.91 = ($204.17 + $110.99) * 6%
Down Payment + Trade-in Value + Dealer Rebate + Other Reductions
$5,450.00 = $1,500.00 + $3,200.00 + $750.00 + $0.00
Trade-in Loan Balance + Tags + Title + Registration + Insurance Costs + Extended Warranty + Other Costs
$1,950.00 = $1,300.00 + $150.00 + $175.00 + $325.00 + $0.00 + $0.00 + $0.00
Negotiated Price - Total Cost Reductions + Total Financed Add-on Costs + Sales Tax
$22,841.00 = $24,850.00 - $5,450.00 + $1,950.00 + $1,491.00
Real Total Cost / Sell After (months)
$268.46 = $25,772.60 / 96
LoanAmount * (Rate / 12) / (1 - (1 + (Rate / 12))-Months)
$451.21 = $22,841.00 * (0.0690 / 12) / (1 - (1 + (0.0690 / 12))-60)
Real Monthly Cost * 12 Months
$3,221.58 = $268.46 * 12
Monthly Loan Payment * 12 Months
$5,414.52 = $451.21 * 12
Negotiated Price - Total Cost Reductions + Total Financed Add-on Costs + Sales Tax
$22,841.00 = $24,850.00 - $5,450.00 + $1,950.00 + $1,491.00
Total Payments - Loan Amount
$4,231.60 = $27,072.60 - $22,841.00
Monthly Loan Payment * Length of Loan (months)
$27,072.60 = $451.21 * 60
Total Payments + Down Payment + Trade-In Value - Resale Value
$25,772.60 = $27,072.60 + $1,500.00 + $3,200.00 - $6,000.00
60
Look up Vehicle MSRP (https://www.kbb.com/cars-for-sale/)
Look up Invoice Amount (https://www.kbb.com/cars-for-sale/)
Look up Rebates (http://www.cars.com/go/advice/incentives/incentivesAll.jsp)
Look up Trade-in Value (https://www.kbb.com/cars-for-sale/)
Look up Money Factor Rates (http://www.cars.com/go/alg/index.jsp)
Look up Car Loan Rates (http://www.bankrate.com/brm/rate/auto_home.htm)
Look up Vehicle Residual Value (http://www.cars.com/go/alg/index.jsp)
Look up Used Vehicle Value (https://www.kbb.com/cars-for-sale/)
