You must have heard people take their car of lease. It is a very common thing these days and preferred by a major chunk of the population. The reason why it is a huge hit amongst the masses is that it is very easy for the customer to own a car as well as not make the full payment at once. However, this does not mean that you get confused between a bank loan and a lease. The two are quite different from each other. Read ahead to know about the tips that will help you to calculate the monthly lease payment of your car.
- Depreciation: Do you know what is the meaning of depreciation with regard to the lease payment of your car? Well, it is simple indeed. Depreciation refers to the largest portion of the lease payment that has to be done. It is very easy to calculate. You just need to subtract the residual from the capitalized cost and then add the term of lease to the result that you get. For those who do not know, the capitalized cost is the selling price of the car that you have negotiated. You must try your best to get the best deal for yourself where you can save your hard-earned money.
- The interest: You must have often heard the term interest when you take a loan. This is calculated at a certain rate, depending on a number of factors such as your age and the purpose for which the loan is taken. When it comes to the interest that is charged by your leasing company, you must understand that it is the biggest way in which the company makes profits. As a buyer, your role in this process is to find the leasing company with the least interest rate. It can be a challenging task but you can search online and get your answers.
- The taxes that are charged: Taxes are something that are common to every place in the world. You need to pay a certain amount of tax on a monthly basis on the lease payment for your car. In fact, taxes are calculated on both the depreciation as well as the interest rate. The local sales tax is kept in mind. The simplest formula to calculate the taxes are monthly depreciation’s cost added to the interest first and then the result is multiplied into the local sales tax rate.
- You add all of it. Now that you have three individual figures at and, you must be wondering that what was the point of all the calculation when you could not reach one number. Well, the answer is that you need to add up all of it. When you add the depreciation, the interest and the taxes, you get one final sum which is indeed the monthly lease payment that you will have to make.
Thus, you now know that it is actually very simple to calculate the monthly lease payment of your car.