This car lease calculator helps you calculate your monthly payment for an auto lease if you know the vehicle price/loan amount, interest rate and its term in months. There is detailed info on this topic below the tool.
What is a car lease?
It is a financial product that allows you to drive a new vehicle without paying entirely it by a single cash payment or by borrowing money through an auto loan.
Usually to lease a car you have to make an initial deposit, the so called down payment which in most cases is around 15 to 20% of vehicle’s price you’d pay to buy it and then you have to make monthly payments during the term of the lease agreed between the lessee and the lessor. At the end of the term, you can either return the car to the lessor or buy it at the residual value.
Here are some disadvantages of a leasing contract:
- When the term expires you don’t own the car since by lease you practically rent it, not buy it. To do so you have to pay its residual value which is established well in advance.
- In case of lease you may confront with some penalties imposed by the lessor. For instance there might be set up a maximum number of miles you are allowed and if so by exceeding it you may pay penalties; in such case of exceeding the mileage limits lessors usually ask you to pay 10 to 20 cents per mile. Or you may need to pay extra in case you fail to keep in good condition the car. There are also cases in which if you try to return the car before the expiring term you may pay penalties.
- On a long run, for instance over 5 – 7 years the cost of leasing will most probably exceed the purchase of a new one through a loan. Thus if you plan to use leasing this way it may prove inefficiently from financial perspective. You may use this car lease calculator that allows you to make two kind of calculations: one is by specifying a desired fix monthly payment and the other one is by setting up a specific term for your lease.
When it is recommended to lease?
Financial experts recommend to use leasing instead of buying a car in cases like the ones presented below:
- You don’t have the funds to purchase your own car by cash or by an auto loan. This is because lease payments are usually smaller than auto loans as they are calculated considering the vehicle price diminished with the residual value.
- In case you expect to have the money needed at the end either to pay for the residual value and continue using that car or have the funds necessary to buy a new one by your own.
- You are sure enough you can stay within the mileage limits set up by the lessor. This limit varies between 10,000 and 15,000 miles per year.
- You know you are going to take care of the condition of the car (in both interior and exterior) as well as avoiding any damages caused by accidents.
- In case you expect to have the money needed at the end either to pay for the residual value and continue using that car or have the funds necessary to buy a new one by your own.08 Apr, 2015