Lease payment/month; how determined?

Question

Does value of the car affect monthly payment on a lease? If I get a car that is worth about $5,000, what might be an average lease payment per month for 3 to 4 months?

Thanks in advance.

Answer 1

I assume you are asking about a used car lease and not a new car lease if the price is only $5000.

First of all, used car leases are not very common but it can be done. The following article has more details:

http://www.leaseguide.com/Articles/lease...

The way that the payment is calculated is based on the car's price, the term (length of lease), the money factor (converted interest rate), and the estimated lease-end residual value.

Here's a calculator that will use these numbers to get a monthly payment:

http://www.leaseguide.com/calc.htm

The problem with used car leasing is that most finance companies and lease companies underestimate the lease-end residual, to be on the safe side. This makes payments higher and often makes it not a good deal.

My suggestion is to go ahead and look at lease payments but also compare that with loan payments for the same car. You might find there is not enough difference to make leasing worthwhile.

Good luck.