FRM: Auto lease payment math

[@ridealvinexpresstaxi]

Mind blown...God bless you sir! This was brilliantly explained for us auto purchasing 'dummies'.

[@susana48395]

Thank you for your excellent explanation of the lease calculation process.

[@harlowization]

Excellent!!! I have been In the business for nearly 20 years and have a complete understanding of leasing. I am amazed at how few auto professionals understand or can even explain the basics of leasing. Some States calculate taxes based on the Cap Cost not on the use payment (Illinois) for example. Other than that small omission your explanation is dead on. I am amazed on how much mis information there is on this subject on the internet.

[@eyoniel]

but if someone is new to the states do you consider like lease car first and then buy a car ?

[@MathCuriousity]

but do all states include interest in tax payments?

[@ifso9539]

is there a way to figure out the money factor if they don't tell you. prior to drawing up any paperwork. IOW I have a lease payment price on an A or B pencil work up. Sales guy is running back and forth to the sales manager and finance. How do I figure the money factor being charged, based on the payment, if I don't have that information yet

[@bionicturtle]

@stgpepper thank you! great question b/c every dealer we spoke to claimed ignorance: e.g., (30,000 + 16,000) * MF = monthly interest (cap cost + residual)/2 * interest rate*1/12 = (cap cost + residual) * interest rate * 1/24 ergo: MF = interest rate/24, where interest rate is applied to the AVERAGE of the cap cost and residual. In the example, 5.76% is that stated annual rate (you could call it a nominal APR), but compounded monthly, so the effective APR = (1+ 5.76%/12)^12-1 = 5.91%

[@rafaelgomez1989]

🎉DETAILED + CLEARLY EXPLAINED ... THIS IS GOLD !!!! THANK YOU SO MUCH

[@diarchangel]

Great tutorial! Thank you. I use a lease calculator app, but I like to know the math so I can confirm long-hand. The lease apps let you move the acq, doc, and other fees as capitalized items. In your spreadsheet, I just added it as part of the cap cost.

[@rvmorgan47]

Why are they adding the residual and the cap cost together to figure interest? To me, that sounds like you are being charged interest on the same money twice because the residue is in the cap cost all ready.

[@MrQwerty71770]

I have been looking for an answer to this question.

[@tfull3021]

Can you explain the interest based off the cap cost and the residual, and why the money factor is 24? You stated to ask for further explanation in your video. Thank you

[@Zidane-Rayaan]

How to download form on website ? Can you share the link here?

[@rafaelgomez1989]

If I pay the TAXES of the selling price OUT OF POCKET, do I still have to calculate the TAX on the lease payment toward the end of this video ?

[@MathCuriousity]

Thanks for the video! Question: can you explain why the money factor multiplies by 24 with a formula or equation that relates it to I=Prt ?

[@mjtuf1]

Is the money factor different at each dealership - do they set that on their own or is that set everywhere the same?

[@makemontanamyhome]

Thank-you very much for taking the time to share your knowledge. Leasing a car is a very confusing process for the average person. It could be made much easier if they wanted it to be, but likely they make lots of money keeping it so mysterious.

[@veenapatel660]

Mercedes best deals

[@realisticvimal]

Shouldn't the interest be on (Cap Cost - Residual) * APR = ?? not sure why you sum them up? the interest should be on my depreciation value for the period i own...am i missing something???

[@nicolem.9354]

I wonder what I’m doing wrong, but the lower the negotiated price, the higher the monthly payment becomes. That can’t be right?

[@Solosmooth]

Damn that one expensive lease for a $32,000 car

[@cogtager]

Lol way too much 😂

[@stgpepper]

Great analysis. Could you explain why the MF is 24? We would appreciate it. Keep up the good work. Thanks

[@i.garretgru3004]

Just perfect, excellent presentation,great

[@superchickensuperchicken7939]

Bionic Turtle, since you can negotiate cap cost and net cap cost where does rebates and discount coming in on leasing a car, because it certainly comes in when you are buying a car?

[@1964robw]

David how did you get to multiplying by 24? I think my underlying question is does that work on any term? Thanks

[@sam111880]

Is there any difference between the terms of lease and loan interms of homes,cars ,...etc My thought is the price is not distinct from those terms just that lease normally stands for paying to rent and loan usually stands for paying to eventually own or by. But a lease eventually re-evaluated to include lease to own as well so some leases are almost equivalent to a loan in the meaning

[@kricekt2001]

I just used your file and my payment is higher than what the dealer is offering. Not sure how this works...

[@marklark8805]

Where is the rent cost?Depreciation yes. Interest yes. What about the cost of the dealer buying the car first so they can lease it to you. The rent cost.

[@Lobsterman5481]

do you really need a down payment?

[@mcmickey3344]

why is the money factor multiplied by 24? Could you help elucidate please? thanks

[@bionicturtle]

@stgpepper Just to summarize that, in case it's helpful, the effective APR (effective annual rate) can be computed as a function of MF as follows: (1+(MF*24)/12)^12-1 e.g., in the example above: (1+(0.0024*24)/12)^12 - 1 = 5.91%

[@kricekt2001]

I am having some confusion with the file vs the $$ dealers are offering..Based on the file my monthly payment is higher than what dealers are offering..

[@333tatlises]

Greatly explained. Thanks

[@mauricio-from-chi-town]

Having issues down loading the excel sheet, can you email it to me?

[@superchickensuperchicken7939]

Bionic Turtle, drive off fees, is this what they call inception fees?

[@armandodacal1706]

Thanks for the spreadsheet, very helpful.

[@problematicss9946]

That’s what I don’t get tho, how are some cars leased for like $150

[@uusetubesforwhat]

Fantastic explanation here, really precise and definitely helpful. I have another question? Does this formula particularly the *24 = MF apply to Canada and their compounded monthly APR? I would really appreciate your response. Its just that I have heard else where that 37 should be used?

[@Ricky2clean]

The Tacoma has a residual value of 76% is that good for the lease term??

[@rafaelgomez1989]

How you figured the M.F. ?

[@ad2181]

David, enjoy your series.

[@kyngelian6335]

A tip: watch series on Flixzone. Me and my gf have been using them for watching lots of of movies these days.

[@geraldelisha710]

@Kyng Elian definitely, have been using flixzone for years myself :)

[@averykamden2340]

@Kyng Elian yea, have been using flixzone for since december myself :)

[@MrDgill25]

I couldn't find the spreadsheet on your website, could you please give me a direct link.. thanks in advance

[@bionicturtle]

Hello. Thanks for watching! All of the spreadsheets that are on our website are part of an FRM study package that you need to purchase. I am not sure off of the top of my head if this spreadsheet would still be part of the current FRM curriculum for 2016 since this video was posted in 2011, but I can check if you would like.

[@mopar21]

So are most consumer leases capital or operating leases?

[@vjnappo]

Is this still available for download?

[@robindelgado5878]

Excellent ty’

[@willnx2]

God Bless You !

[@davev3008]

Who Decide Residual Value?

[@jerrylundegaard2592]

The manufacturer as a percentage of MSRP.

[@youngoffice7700]

LINK Broken

[@B3Band]

It's kinda lame that you would charge for this spreadsheet. It's not like there's anything proprietary in that spreadsheet. You even show us the formulae in the video, so all you're doing is making us waste time re-creating what's already been done. It would be like if KZbin forced you to program the upload page before putting up the video.

[@bionicturtle]

Hey, I have *never* charged for anything on youtube. We've upgraded the site and forum since this video. Here is the XLS trtl.bz/2sMC9KA (I will add it to the description)

[@FROSTY420692002]

Wow this is so complicated

[@onenikkione]

don't go and lease a car if you think it is complicated

[@JamesBond-uz2dm]

Never lease a vehicle.

[@onenikkione]

if you buy new cars and trade them in after 2 - 4 years then you should at least look into leasing

[@knowledgeapplied]

A.K.A. Never get a 100% tax write-off, from a lease ("rental"), if you own even a part-time business. Instead, what you should do is always get taxed the highest amount possible by the gov't for staying ignorant and following the heard. Great idea.