# How to Calculate Lease Costs

If you are negotiating a lease that meets your needs then there are a few things that matter to you a lot. For starters, the person who is leasing that particular object (for example a car) to lease, he would want to know about the monthly lease payment which he will have to pay. Now in order to know the correct lease payment, you must know how to calculate it. It will help you know whether you are being over-charged with something or are you paying an additional fee. Therefore, always know about your whereabouts so no one can lie to you about anything.

### Instructions

• 1

You must know that the lease payment consists of three things. These three elements eventually make-up the whole lease payment and you should know all about them. The first is depreciation, which is also the reduction value of the car (or any other thing) over the leasing term. Second is the financing cost. It is the total amount that you have to pay for the car you are trying to lease. This is always computed on the amount at which the leasing company would have purchased the car. The third thing is the sales tax. In any country, there is always a sales tax involved and it is always added to the lease payment which you pay on a monthly basis.

• 2

Now, first you have to calculate the depreciation portion of the lease payment. Take out the negotiated selling price of your car and then subtract the down payment that you have paid off. Now after that, take out the residual value of the car. Now find out the total number of months you will have to pay the lease. Subtract the residual value from the first answer that you have taken out and then divide it by the number of months the lease is going to last.

• 3

Now you must calculate the finance part of the lease payment. If the dealer has given you the interest rate, divide it by 2400. Now, right at the end, add the first answer you calculated in the first step to the residual value you took out in the first step. This will help you solve your financial part of the lease payment.

• 4

Now in the final step you must get to know about the sales tax which you will have to pay each and every month. Each country has a different sales tax policy; therefore, be careful.

• 5

Now add the answer to the second step, the third step and the fourth step to get your lease payment.