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How You Can Determine Your Monthly Payment

Take this chart with you when you shop for a lease vehicle. Practice now:

As you negotiate, make note of the following:

EXAMPLE YOUR LEASE MSRP ("sticker price") Capitalized cost Net trade–in allowance Adjusted capitalized cost Residual value Term of lease Money factor $25,000 $23,000 $3,000 $20,000 $12,000 36 months .00375

How You Can Determine Your Monthly Payment

Despite the fact that the sticker price was $25,000, the consumer negotiated hard and got the dealer to agree to a price of $23,000 ("capitalized cost"). The trade–in resulted in positive trade credit of $3,000. Therefore, the adjusted capitalized cost is $20,000.

Here´s how you can determine your monthly payment:

Monthly depreciation + rent ("interest") charge + tax

1. Determine your monthly depreciation:		$222.22
Adjusted capitalized cost MINUS residual value DIVIDED BY lease term	$ 20,000 - 12,000 36
2. Determine your monthly rent ("interest") charge:		$120.00
Adjusted capitalized cost PLUS residual value MULTIPLIED BY money factor	$ 20,000 + 12,000 x .00375
3. Determine your monthly taxes:	$ 20.53
Monthly depreciation ADD Monthly rent ("interest") charge MULTIPLIED BY excise tax rate*     * Let´s say your state tax is 6%	$ 222.22 + 120.00 x .06
THEREFORE, YOUR MONTHLY PAYMENT SHOULD BE		$362.75

If, for some reason, the price quoted by the leasing representative is not within a few dollars of this number, ask for an explanation. This is one way you will discover if there are any hidden charges.

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