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How to figure your sublease payment |
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Written by Dawn C.
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Monday, 11 September 2006 |
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Understanding how to calculate your daily lease charge makes it easier for you to make an informed arbitration. Yet, most of us shy away from the complicated math on our sublet contract, leaving it up to the tradesman to do the expense formula. Actually, it's not that difficult! in olden days you understand all the figures implicated in adding your daily payments, everything else falls into position. These key statistics are:
MSRP (tiny for Manufacturer's Suggested retail expenditure):
This is the list price of the vehicle or the window sticker
price.
Banknotes element: This determines the interest rate on your
sublease. Demand on your tradesman to reveal this rate
previously entering into a sublet.
Lease phrase: The number of months the dealer rents the
vehicle.
Residual Value: The cost of the vehicle at the end of the
sublet. Again, you can get this outline from the dealer.
Now, let us add up a sample sublet fee based on a vehicle
with an MSRP (sticker price) value of $25,000 and a money
element of 0.0034 (this is usually quoted as 3.4%). The
scheduled-lease is over 3 years and the estimated residual
percentage is 55%.
The primary move is to calculate the residual value of the
car. You increase the MSRP by the remaining percentage:
$20,000 X .55 = $11,000.
The car will be worth $13,750 at the end of the sublet, so
you'll be using:
$20,000 - $11,000 = $9,000
This amount of $9,000 will be used over a 36 month sublease
period giving us a monthly charge of:
$9,000 / 36 = $250.
This is the first part of the monthly expense, called the
daily depreciation charge. The second part of the monthly
payment, called the money factor charge, factors the
interest charge. It is adjusted by adding the MSRP figure
to the residual value and multiplying this by the cash
part:
($20,000 + $11,000) * 0.0034 = $105.4
Finally, we get the approximate monthly payment by joining
the two statistics together:
$250 + $105.4 = $355.4
To summarize, the example formula looks similar to this:
1- Monthly Depreciation Charge:
MSRP X Depreciation Percentage = extra Value MSRP /
Residual Value = Depreciation over sublease term
Depreciation over sublet term / sublease term (number of
months in the lease) = monthly depreciation charge
2- Monthly factor money charge
(MSRP + Residual value) X Money factor = money part fee
3- Example Monthly Payment:
depreciation charge + money factor payment = monthly fee
Keep in sense that this is a simplified calculation that
does not grab into account taxes, fees, rebates or any
additional incentives. The calculation gives you a ballpark
form or a rough suggestion of what your lease payments for
the vehicle in question should be.
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Last Updated ( Saturday, 07 October 2006 )
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