Lease Financing

For auto-consumers,looking at the numbers is one of the most difficult and time consuming aspects of leasing.

For instance look at the finance charge on a lease. The majority of people don’t understand how this is calculated on capitalised cost AND residual value instead of just the capitalised cost.

For most, it seems evidently obvious,just as is the case when purchasing, that a charge should be levied on the capitalised cost of the vehicle.
 
When you lease a car, you’re only borrowing the car over a stated period of time with the option of buying the car and the end of the lease. The residual
value equals the “loan balance” at the end of the lease. Car leasing online with car lease specials are offered and have competitive rates which apply to everyone.

If you add this figure to the capitalized cost and divide by two, you’ll get the average capitalized cost which will be outstanding at the end of the lease term.

For example if are leasing a car with a capitalized cost of $50000 and a residual value of $30000. Private car lease options are available online and from all major leasing companies.

Your average balance over the lease term, irrelevant of how long it is, is £20,000 – the total of the two divided by two -.

Using this sum works because the money factor is the annual interest rate divided by 24, rather than 12. Continuing with our example and assuming an
interest rate of 6% APR: 60$,000 X (6 per cent / 24) = $150

(Capitalized cost + residual value) X (interest rate / 24) =finance charge applied monthly

This finance charge will then be added to the depreciation charge in order to calculate the monthly payments on your lease. Car leasing short term is a great alternative and worth looking into.