Calculating the monthly payments when leasing a car is a very important thing to do yourself. Naturally, the car dealership will provide you with a calculated price, but you want to ensure they are correct by checking them yourself. It is not a hard process as long as you know what to do.
Start by gathering all the figures that are necessary in calculating the payments. The MSRP of the vehicle, money factor/interest rate in which the lease is based on, term of lease, and the residual value of the lease will all be needed in order to start your calculations. You can contact the dealer, look online, or check with the financing bank in order to obtain this information.
Multiply the MSRP by the residual value to determine how much of the cars price you will use. Subtract the total amount from the price you are leasing the car for.
For example: (MSRP ($20,000) X Residual Value (50%)) – Price ($18,000) = $8,000 (The car value to use)
You can then divide the determine car value by the number of months in the term of the lease to provide you with the monthly payments. If you lease is 36 months long, then you would take the $8,000/36 to conclude a monthly payment of $222.22.
For example: (20,000 + 18,000) X .003 = $114 interest making the monthly payment a total of $336.22.
There will also be a monthly tax payment which can be found by multiplying the lease payment by the state sales tax. Be sure to add in any extra charges, security deposits, and down payments so that you calculate the most accurate estimate.
Lease payment calculators can be found online in many places like Edmunds.com. This really aids in the process of determining your monthly lease payments by having pre-designed sections and doing the math for you.
Even though your estimate will not be exact, it should be close enough to make a decision on if it is right for you or not.
Calculating a Car Payment in Excel
Sticking to a monthly budget can help make life a lot easier. If you are looking to buy a new car, be sure you are able to fit a car payment into that budget before you decide to purchase. By doing this, you can determine how much money to save up in order to afford the new car.
You can factor your car payment using the interest rate, term, and loan amount to determine what is a good price for you. Excel is a great place to organize all this information as it lets you change one factor at a time while displaying the how each affects your payment each month.
Head to Microsoft Excel and start with a new worksheet where you can enter the cost of car, down payment, loan amount, interest rate, and length of loan into the cells provided.
Start by clicking on a black cell and clicking on “Function” which appears in the “Insert” menu. After typing “PMT” into the search box displayed, hit “Go”.
In the Rate field of the Function Arguments dialogue, type in the “cell reference of the interest rate/12” to display the interest rate per month. In the Nper and Pv fields enter the corresponding cell reference.
Because you are looking to pay off the entire loan you will want to leave the Fv field black as the default is 0 indicating at the end of the month each payment will be made.
After entering all the proper material, hit “OK” and you will see your monthly car payments.
Play around with the numbers and values in each cell to gather information on how this will affect the monthly payment.