Lease Questions

[Kia Stinger]

Welcome aboard, @John1956! Thank you for signing up!

 

[BarryLI]

I think this is the error in the calculations:

The interest is charged not only on the amount you are paying off (the capitalized cost less the residual), but also on the residual itself. That is, you do not have to pay off the residual, but you do have to pay interest on it. A .00181 money factor is about 4.3% apr. So 25,000 residual times 4.3% per year times 3 years is $3,225. Spread over 36 months, this is $269 additional per month.

Interest on a residual for a car you're giving back? No way, Jose.

 

[John1956]

That's how it works. Per Edmunds:

1. Sticker price (MSRP) of the car $23,000
2. Times the residual value percentage x 0.57
3. Equals the residual value = $13,110
4. Negotiated selling price of car $21,000
5. Add in fees + $1,200
6. Add lines 4 and 5 to get gross capitalized cost = $22,200
7. Subtract your down payment and rebates - $2,200
8. This is your adjusted capitalized cost = $20,000
9. Subtract the residual value from adjusted capitalized cost.This is your depreciation amount.
$20,000 - $13,110 = $6,890
10. Divide the depreciation amount by number of months in your lease. This will be your base payment.
$6,890/36 = $191.39
12. Add the adjusted capitalized cost and the residual value. Take the sum and multiply it by money factor. This is your monthly rent charge.
($20,000 + $13,110) x 0.00125 = $41.39
13. Add the rent charge to your base payment to get your pretax lease payment
$191.39 + $41.39 = $232.78
14. Multiply your tax rate by the pretax lease payment to get the total lease payment.
$232.78 x 1.095 = $254.89

My method of calculating is:
1. Cost of car $22,200
2. Down payment and rebates $2,200
3. Capitalized cost $20,000
4. Residual $13,110
5. Depreciation $6,890
6. Interest rate .00125 money factor times 2400 = 3%
7. Payment on depreciation of $6,890, 36 months, at 3% APR = $200.37
8. Interest on residual $13,110 x 3% APR x 3 years = $1,179.90
9. Interest on residual per month $1,179.90 / 36 = 32.78
10. Total monthly payment $200.37 + $32.78 = $233.15
11. Sales tax $233.15 x .095 = $22.15
12. Total monthly payment $233.15 + $22.15 = $255.30

My method comes up 41 cents different than Edmunds (immaterial). This illustrates that you are paying off the loss in value as a loan over the lease period, and in addition are paying interest on the residual.

Here is a link to the Edmunds site:
https://www.edmunds.com/car-leasing/calculate-your-own-lease-payment.html

 

[Maniacjc]

I’m hoping to get into a stinger when my current lease is over in a year but the payments sound too high. I know my car is really different 4 dr but loaded with 375 Hp, Rwd Dodge list was $39,900 MSRP and $0 down $309 with taxes 12k miles . 36 months made it a must lease. I hope Kia gets with the right lease deals and everyone will want one. Doesn’t matter on lease option price because I would get a new one. Higher purchase option makes for cheaper payment. Sounds like a great car and hope to get one. Faster than a 5.0 and AWD. I’m in but not at a crazy lease pmt.