Calculate Your Own Lease Payment!

Calculate Your Own Lease Payment!

Now that you’re all set to invest in a vehicle, you may want to learn a bit or two about calculating your own lease payment. It’s a five-step process and if followed correctly, you will be able to calculate your own payments and get an understanding of credit scores. It will help to know how these scores affect your lease payment and what you could do to reduce those payments. Below are a few useful steps to get you started:

Accumulate All Information on the Lease

To be able to get an estimate on the vehicle’s lease payment, it is important that you gather the information related to the vehicle’s residual value, MSRP, lease term, negotiated price and the interest rate imposed. One could easily possess this information by either getting in touch with the vehicle’s finance company or through the dealer’s website.

The Vehicle’s Value Should be Calculated

To simply calculate the value of the vehicle, take into consideration the residual value and the MSRP. For example, let’s say that the MSRP amounts to $25,000 and the residual value is seen at 50%. However, if you do manage a negotiation or bargain at $24,000, the value of the car could be seen at $11,500 in which $25,000, when divided by 50% and subtracted by $1,000, equals $11,500.

Calculating the Principal Amount

Here, the term of the lease is divided by the value of the vehicle. For example, if the vehicle value stands at $11,500 while the term of the lease clocks in at 36 months, the principal amount would amount to $319.44. This is calculated by dividing $11,500 by 36.

Interest Amount

To be able to determine this factor, make sure to add the negotiated price to the purchase price and have it multiplied by the interest rate. As an example, if we add $24,000 to $25,000 and further use an interest rate of .003, the interest would then amount to $147.

Interest Payments and the Principal Amount

To receive an estimated amount, make sure to add up the interest payments with the principal amount. The resulting amount could be considered an estimate of the lease payment. Although, please note that this amount may not always include the fees, taxes and other add-ons. Nevertheless, it should help you with a rough estimate.

How Could You Reduce the Lease Payment on a Car?

A monthly lease payment could as well take a toll on your finances. Here are a few ways to reduce the lease payment:

Lower Interest Rate

Compare the interest rates offered by different lenders. Make sure to take the time to run through them all before making your decision.


If you don’t hold good credit, a cosigner may work well for you considering that it will help provide the individual with competitive lease terms.

Debt Refinancing

This is another way to alter the lease payment of the vehicle. If the lease is way too expensive for you, inquire about refinancing offers with your dealer.

In all, take the time to understand where you’re at financially. Do not jump to conclusions but take the time to think about what has been offered.