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Old 01-03-2013, 03:44 PM   #1
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car lease interest calculation

For anyone experienced in car lease, how do they calculate the interest in a car lease? Say a 2.9% APR, is that 2.9% of the MSRP (sale price, down payment, tax, and residual value) or 2.9% of the amount you're leasing/amortizing?

Doesn't make sense if it's the MSRP since you're not actually borrowing the down payment, tax and residual value.

Anyone know?
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Old 01-03-2013, 05:01 PM   #2
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You answered your own question - it's whatever you borrow.

Final price of car - down payment/deductions = amount financed.

Let Amount Financed = P, total amount = I.

I = P(1+r/n)^nt, where r = interest rate, t = number of years, and n = # of interest calculations.

If you downpay 3000 on a 25000 car, interest over 5 years at 2.9% APR would be:

22000(1+0.029/1)^1*5 = 25380.46; and your total interest over the term of financing is $3380.46.
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Old 01-03-2013, 05:18 PM   #3
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Quote:
Originally Posted by inv4zn View Post
You answered your own question - it's whatever you borrow.

Final price of car - down payment/deductions = amount financed.

Let Amount Financed = P, total amount = I.

I = P(1+r/n)^nt, where r = interest rate, t = number of years, and n = # of interest calculations.

If you downpay 3000 on a 25000 car, interest over 5 years at 2.9% APR would be:

22000(1+0.029/1)^1*5 = 25380.46; and your total interest over the term of financing is $3380.46.
But what if I return the car? Technically I didn't borrow the residual value. Or am I missing something here?
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Old 01-03-2013, 09:49 PM   #4
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Oh, sorry, didn't see the lease part.

Found this article!

http://www.edmunds.com/car-leasing/c...e-payment.html
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