1994-2002 [Subscribe to Daily Digest] |
You need to provide more info; capitalized cost, residual value, lease buydown (down payment/trade, term in months.
Leasing is just a game of Net Present Value and is a boon to car salesmen because it confuses the issue of true cost. Net Present Value is the sum of the discounted cost of all cash inflows and outflows. Cash flows in the near term have more value than cash flows farther out in time due to interest costs.
If you only focus on monthly payments, they give you what you want per month and make it up on a higher residual (end of lease buyout to purchase the car) or downpayment and you will not realize it until later when you are trying to get out of the lease, or keep the car at a cost of say $16,000 (residual) when the used car market is at $12,000.
Anyone considering a lease should look up the basic principles of the math involved, your computer's MS Excel program will have the formula, and then you can run build some little spreadsheets to create "what if" scenarios where you change the variables and see what the outcome, or total paid to the dealer/finance company.
To simplify, your monthly payment is basically this:
A) Cost less Residual less Down Payment = amount amortized (with interest)
over the term
B) Residual times interest rate = financing of unamortized balance
Monthly Payment = (A) + (B)
Change the Cost or Residual or down payment or term or interest rate (they call it money factor so it sounds less threatening) and you get a different monthly payment. So how could we compare your deal to your friends? Calculate the Net Present Value; the lowest NPV is the best deal for the customer. The highest NPV is the best deal for the car/finance company.
You are committing to a sizable financial transaction, like $20,000 to $40,000, so you should know the math. Hope this helps.
posted by 208.212.2...
No Site Registration is Required to Post - Site Membership is optional (Member Features List), but helps to keep the site online
for all Saabers. If the site helps you, please consider helping the site by becoming a member.
![]() |
![]() |
![]() |
![]() |
![]() |