By
Ernesto on Sunday, September 27th, 2009 |
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For drivers and consumers, crunching numbers is certainly one of the hardest aspects of leasing. Consider the car lease financing charge for instance. Many of them just cannot comprehend that this calculated on residual value and capitalized cost and not just on the former. For most people, it seems that when buying a car, they believe that the charge must be levied on the automobile’s capitalized cost.
This is not quite the case. When you go through auto leasing, you are simply utilized the vehicle over a specific period of time given the choice of purchasing the car in the end.
How to arrive at car lease financing charge
The loan balance is actually represented by the residual value at the lease end. If it is added to the capitalized cost and you divide it by two, you will arrive at the average capitalized cost which is outstanding over the term of the lease.
Let us say you are leasing a vehicle with a 25,000 dollar capitalized cost and 15,000 dollar residual value. The average balance that you will arrive over the term of the lease, regardless of how long the term is, is 20,000 dollars, which is actually the sum of the two amounts divided by two.
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Utilizing such sum does work as the money factor is considered the yearly rate of interest divided by 24, instead of 12. Let us continue with the example and assume that interest rate is 6 percent APR. 30000 dollars multiplied by 6%/24 equals 75 dollars. The formula used is “capitalized cost plus residual value multiplied by the “interest rate over 24” (months). The result is the monthly car lease financing charge.
Finally, in order to calculate the lease monthly payments, the car lease finance charge is added to existing depreciation charge.
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By
Ernesto on Wednesday, April 15th, 2009 |
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For you to obtain a good auto lease financing, two options are possible. It is either you lease via the finance sources of your auto dealer or independent auto leasing companies. The common dealer actually has a financial source – this can be the finance company of the manufacturer such as the General Motors Acceptance for example or any high important banking institution just as the Chase Manhattan. On the other hand, there are car leasing companies that have no financial responsibilities to any finance source of a manufacturer, but they work with car dealers all over the country.
Which should you choose, a finance source or auto leasing company?
The typical dealers offer much better deals on limited time promos. Manufacturer subsidized vehicles that subvented residuals are considered to be attractive car leasing deals and therefore can be very difficult to resist.
Independent auto leasing companies are certainly capable of offering you as a prospective client impartial and 100 percent professional advice that focus of the car selection regardless of the vehicle’s make as well as type of model. These car lease companies do this simply because they are independent from any vehicle manufacturing firm or finance source.
These entities are also known to be flexible especially when it comes to the negotiation of leasing terms and conditions on areas such as the mileage and residual values. Therefore, it is advisable that if you desire a more client oriented relationship with an agent, consider one of those independent auto leasing companies.
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By
Ernesto on Thursday, March 12th, 2009 |
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For car owners and consumers, auto lease financing is definitely important as crunching figures is one of the most confusing and problematic aspects of car leasing. Of course, you need to be in a situation when you have a good credit score, otherwise you will have to go through the difficulty of obtaining car lease with bad credit.
When taking on the figures involved in auto lease financing, like for example, auto lease rates, generally, most consumers just do not comprehend how such auto figures are computed on capitalized cost, with the use of the auto leasing calculator, which includes the residual value. Obviously the case should be that when buying a car, car lease financing charges must be levied on the car’s capitalized cost.
Well, this is not always the case as when leasing a car, you are simply using the auto over a specific time frame and given the option to buy it. The residual value actually only represents the balance of the loan when the lease ends.
If you add to the capitalized cost the residual value and divide the sum by two, you will arrive at the capitalized cost figure. Such figure is outstanding over the term of the lease.
For example, you want to lease an auto that has a 25,000 dollar capitalized cost and 15,000 dollar residual value. The lease term balance, irrespective of the duration of the lease is 20,000 dollars. You arrive at this amount by adding the two figures and dividing it by two.
Auto lease financing can be a very difficult process to comprehend, especially if this is new to car leasing. It is best to employ the services of a lease professional who will guide you through the process of leasing a car in the most convenient manner.
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