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In Reply to: Money Factor Question posted by DCC on February 04, 2001 at 23:18:49:
A lease payment is basically two things:
1) monthly depreciation, and
2) monthly rent.
The depreciation calculation is simply obtained by first calculating the residual - multiply the M.S.R.P. by the published percentage offered by the leasing company (e.g. BMWFS 61% for 36 mos.)...
Next, subtract the residual from the adjusted cap cost which is the "selling price" (+) the bank fee and luxury tax (if applicable)(-)any cap reduction. Then simply divide that amount by the term of the lease to obtain the "monthly" depreciation.
The "rent charge" calculation is also very simple... Just add the adjusted cap cost and the residual,and multiply that sum by the lease money factor(e.g. .00350). That product is the monthly rent charge.
Now add the depreciation and the rent and you have the base monthly payment!! :-)
All that's left is the monthly tax, based on your county of residence...
Good luck!
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