How to Estimate Your Lease Payments and Get a Better Lease Deal »

How to Estimate Your Lease Payments and Get a Better Lease Deal

It's your responsibility to make sure your auto lease deal is fair. Understanding how leasing works gives you more leverage when you're negotiating a rate. We're going to show you how to calculate a fair monthly rate for leasing the car of your choice. Once you've done it, choose a dealer and talk to a salesperson (who will be impressed, if you've done this right). Make an offer and find out if he or she will accept it. If he doesn't, you may choose to compromise.

Here are things you'll have to gather:

  1. The vehicle you want, down to the color and package/trim.
  2. The vehicle's market value (retail price). It's essentially what you would offer for the automobile. You're probably not going to be able to get a deal if it is below the dealer invoice price, which you can find here. On the other hand, it's usually lower than the MSRP of the vehicle. (MSRP can be found in the window of a new car or on the manufacturer's website)
  3. The money factor (Interest rate divided by 2,400). You can call your bank or the dealer to find out what this will be. Generally, it's around .00125.
  4. Your lease term. This is up to you. You need to find out what options your manufacturer offers, however. Google it or call a dealership.
  5. The car's residual value. This is its value after a period of time. In our case, it's how much the car is expected to be worth when the lease expires. Find it here.
  6. How much money you want to put down (we recommend limiting this to about $2,000). The more you put down, the lower your monthly payments will be.
  7. Some quoted rates from all of your local certified dealers. We'll come back to this step.

Essentially, what you'll pay each month is the car's value after your lease period divided by the number of months for which you lease it, plus your money factor. Here's how to work toward that final number. Keep in mind, this is an ESTIMATION. You won't be able to calculate the exact rate. This is a ballpark figure which you can use in your negotiations.

Step 1: Market Value at End-Term

Multiply the residual value (for the lease term) by the MSRP. Here's an example. If the car's MSRP is $30,000 and it's residual value is 65%, you get "$30,000*.65 = $19,500." 19K and change will be approximately the vehicle's value when your lease expires.

Step 2: Determine the Depreciation

Take the retail price of the car and subtract the market value at end term from it. This is the amount your car will depreciate during the course of the lease.

Take your market value or offer price and multiply it by the residual value. Let's say we're going to offer $28,500. $28,500 - $19,500 = $9,000. That's how much the value of the car will drop during your lease period.

Subtract your down payment from this amount, if you put money down. Let's say you put $1,000 down. You end up with $8,000.

Step 3: More Calculation

a. Now divide the depreciation by the number of months in your lease term (let's say it's 36): $8,000 / 36 = $222.22.

b. Then multiply the money factor by the sum of the negotiated price of the car and the residual value. Let's says our money factor is .00125: ($28,500 + $19,500) * .00125 = $60

c. Add the results from a and b together: 60 + 222.22 = $282.22.

That's it, your estimated payment! Keep in mind, this doesn't include taxes or fees. You'll have to check your local rates in order the get the exact amount. However, it's close enough to offer. Your dealer can determine if it's acceptable.

Step 4: Get Some Quotes and Make an Offer

Now that you have a ballpark estimate of what you might pay (or a pretty close estimate, if you've gotten familiar with taxes and fees) the next step is to shop around and see which dealer comes closest to it. You can also learn a little bit about the salespeople themselves and choose which one to do business with. The easiest way to get quotes from all your local dealers is to request them here at Securely and conveniently get quotes and residual values in a matter of minutes. Click here to get started!

What Our customers are saying

The lease rate I got by calling the dealer was $67 higher than the rate I got from Car Leasing Secrets. It’s all about the local competition. So happy with my Benz!
Cristoph Wiese
Athens, GA
This is probably the easiest way to get quotes and compare them. I got one from each dealer in my city. One of them was surprisingly low. The quotes are free. No worries there.
Kristen Fletcher
Albany, NY
What a great way to shop around! I wanted a Corolla. There’s only one Toyota dealership in my city but I got a quote for a Honda Civic and decided to go with that one because I got such a good offer.
Mark Dolan
Missoula, MT