How to use the auto lease calculator
Calculating an Auto Lease
by Paige Estigarribia
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When new car shopping, one of the decisions buyers are often confronted with is whether to lease or purchase a new car. Using Bankrate's Auto Lease Calculator is a fantastic way to figure out how much you'll end up paying for your leased car in the long run. So how does the calculator work?
Step 1: Enter the MSRP
This is the retail price of the car (Manufacturer's Suggested Retail Price), and it's usually the price on the window sticker required by law. This is the asking price of the car before you've done any negotiating to get the price down.
Step 2: Enter the Final Negotiated Price
This is the price that you've agreed to pay for the car, after you've negotiated to lower the price with the salesman and the sales manager if necessary.
Step 3: Enter Your Down Payment
A "down payment" is the amount that you pay when you sign the original contract and drive away the car. It can be cash/check or the value of your trade-in vehicle. This is the place where you'll enter the down payment you plan to pay for the car.
Step 4: Enter the Usage tax (Sales Tax)
This is where you'll have to put in the sales tax rate for your area.
Step 5: Enter the Length of the Lease
This is where you will enter the time period that you plan to lease the car. The time period can vary depending on how long you want to keep the car. The length of the term will affect the payment amount. Generally the longer the lease the lower the monthly payment will be.
Step 6: Enter the New Car Lending Rate
This is the interest rate that you have qualified for or negotiated for as part of your dealings with the auto salesperson. Many times, your credit score will directly affect this rate. Also rates may vary between dealers with some offering lower rates than others.
Last Step: Enter the Value of the Car at the End of the Lease
This is the residual value of the car at the end of the lease or what the car is worth after the lease is over.
Combining all of these factors will give you a final, estimated monthly payment for your lease term.
If you are considering an auto lease, launch the calculator and give it a try.
Paige Estigarribia is a writer for The Dollar Stretcher who enjoys writing about food, frugal living, and money-saving tips. Visit Paige on Google+.
Take the Next Step:
- Before committing to a lease, compare auto loan rates to determine if a loan might make better financial sense than a lease.
- Learn more about auto leasing by visiting the Dollar Stretcher Library.
- Get control of your financial life. Subscribe to Financial Independence, a free daily email that provides you with the tools to help you gain that control and achieve financial independence. Subscribers get a copy of Are You Heading for Debt Trouble? A Simple Checklist for FREE!
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