mm528

For those of you who have leased your car:
I was reviewing the payment structure- one thing struck me as kind of odd:

MSRP : 37106
Invoice : 34754
Residual : 58%
36 month lease
Money Factor : 0.00145
Capitilize Cost : 14408
So: Payment should be $14408/36 = 400 / month

but then there is an added line for Service Charge which is the money factor * (financed amount + residual) which is $57541 = so the service charge is : $77 / month
which is added to my monthly rate

does that make sense? or is this something my dealer is doing to make money?
thanks for your help on this

a4flyer

I think what might be messing you up is that you pay interest on the selling price down to the residual value. Not just on the difference between these two values (i.e., not just on the capitalized cost). But the way the dealer expresses it does not make it clear. Its easy to work in excel or if you have a financial calculator. You need the actual interest rate - not the money factor (thought money factor x 24 may be close to the APR). You can get a decent approximation by dividing the difference between selling price & resid. value by 36. I think this will be your $14,408/36=$400/mo. Subtract this $400 quotient sequentially 36 times from the selling price. In effect this is each month's principal payment chipping away at the MSRP til you are down to the residual value. BUT YOU'RE NOT DONE YET- now starting with the MSRP multiply each of those declining monthly values by the APR divided by 12. This is the monthly interest rate applied to the decreasing value of the car starting with the MSRP and going all the way down to the residual value. Add up all 36 of these interest payments + all of the "capitalized cost" (i.e., $14,408)and divide this sum by 36. Apart from taxes, security and admin/bank costs etc and barring any brain cramps on my part, this should get you real close to your monthly payment.

Hope that makes sense and is not too confusing.

zhmontana

Monthly Lease Payment = depreciation fee + finance fee + sales tax

depreciation fee = (Negotiated Cap Cost - Residual) / Term

Finance Fee = (Negotiated Cap Cost + Residual) x Money Factor

Sales Tax = (depreciation fee + finance fee) x Sales Tax Rate