tag:blogger.com,1999:blog-5465015914589377788.post8572442701442074817..comments2022-05-17T09:28:55.609-04:00Comments on Michael James on Money: Understanding Car Lease PaymentsMichael Jameshttp://www.blogger.com/profile/10362529610470788243noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-5465015914589377788.post-32938751030446505512009-11-29T22:30:27.515-05:002009-11-29T22:30:27.515-05:00Robert: Thanks for the information. The calculat...Robert: Thanks for the information. The calculation you give is the same as what I called the "Exact Lease Payment Calculation". I'm glad to hear that Canada doesn't use the "money factor". It's sad to think that people can't do the simple calculations to figure out a payment properly instead of using a simpler approximation.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-80758367575786639092009-11-29T20:00:13.658-05:002009-11-29T20:00:13.658-05:00For 15 years I developed and sold the CarCalculato...For 15 years I developed and sold the CarCalculator. Canada's first and only car lease/loan software for consumers. I also developed and sold the HomeCalculator for mortgages.<br />Here's how leasing math works:<br />Price of car is $20,000.<br />Residual is $8,000.<br />Interest is 5%. Term is 48 months.<br />Your payment on the part of the lease you are paying off is calculated just like a loan by taking $20,000-$8,000=$12,000 over 48 months=$276.35<br />The interest on your residual is $8,000 x 5%/12 months=$33.33<br />Add them together $309.68.<br />Money factors are a US invention to hide interest rates from consumers, they are not used in Canada.<br />Sincerely,<br />Robert LoPresti<br />OrangeSoft<br />Pickering Ontario<br />contact_me@pathcom.comRobertnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-60504868373069347502009-11-25T11:00:53.340-05:002009-11-25T11:00:53.340-05:00Hey Michael, thanks for taking the time to explain...Hey Michael, thanks for taking the time to explain the "money factor". I really had no idea where it came from!<br /><br />Oh and I forgot to reply to you in the comments, my annual interest rate on the depreciation is way off as I did not account for the time factor. <br /><br />Thanks again!Million Dollar Journeyhttp://milliondollarjourney.comnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-61511382788330196592009-11-25T09:26:07.541-05:002009-11-25T09:26:07.541-05:00Big Cajun Man: I'm no fan of leasing -- too m...Big Cajun Man: I'm no fan of leasing -- too many people use it to get a more expensive car for the same payments. Then as you say, they're left with nothing for their money at the end of the lease.<br /><br />I'm not sure I fully understand your question, but let's try a 5-year lease vs. buying for a Honda CRV over 5 years assuming 4.9% interest and a residual value of 40% of purchase price. Lease payments work out to $384+sales tax and loan payments work out to $563+sales tax. Sadly, some car shoppers who can afford the higher payment would just move up to a lease on a more expensive vehicle.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-45612019628449983582009-11-25T08:24:35.429-05:002009-11-25T08:24:35.429-05:00Useful info, but at the end of it, you have nothin...Useful info, but at the end of it, you have nothing to show for your money (if you buy a car you have a worthless asset as well, however, at least you can keep driving it until it falls apart (and the fall apart factor differs from car to car)).<br /><br />Is there a useful set of numbers to show now much more you pay for cars buying vs. leasing, say over a 6 year period?Big Car Manhttp://www.canajunfinances.comnoreply@blogger.com