Category: Leasing

Hunting for a great car lease deal is inconvenient and exhausting. Even if you’ve contacted multiple vehicle leasing companies, it’s difficult to identify a fair quote without knowing what goes into determining that number. That’s why D&M Leasing has simplified the process for you.

Estimate Your Lease Payment

All you need to calculate your car lease is a few simple details about the car you want and current interest rates.

You Will Need:

1. The MSRP: What is the car listed at? The manufacturer’s suggested retail price (MSRP) is the standard dollar amount that the vehicle is worth when brand new.
2. The Money Factor: The money factor is how your interest rate is calculated. It is used as an alternate way of expressing the annual percentage rate (APR). On average, the money factor is 0.00125.
3. Lease term: The standard lease term is 36 months. Other car leasing companies may offer longer lease terms, but it’s not recommended since you will pay for more depreciation.
4. Residual: The best way to find out the residual value is by either calling the dealership, or looking it up online through a vehicle valuation company such as Kelley Blue Book®. Residuals for 36-month lease terms are typically between 45 and 60 percent.

Calculate Your Lease Estimate

The average cost of a new vehicle is about $33,000, so we will use it as the MSRP to show you how lease estimates are calculated. Residual Values are usually between 45 and 60 percent. We’ll use the lowest residual value in our example. This serves as an example of a car lease quote without any negotiated costs or specials.

• Multiply the MSRP by the Residual Value (Percentage).
  First, you need to determine the car’s worth at the end of the lease term.
  Equation:
  MSRP x Residual Value (percentage) = Residual Value (dollars)
  $33,000 x 0.45 = $14,850

• Subtract the Residual Value (Dollars) from the MSRP.
  Since you’ve estimated residual value, next calculate the depreciation.
  The depreciation is the amount of car “use” you are paying for during your lease.
  Equation:
  MSRP – Residual Value (dollars) = Depreciation
  $33,000 – $14,850 = $18,150

• Divide the Depreciation by the Lease Term
  Now that you have an estimate on how much your total cost of your lease will be, you can calculate your monthly payments.
  Equation:
  Depreciation ÷ Lease Term (Months) = Monthly Payment
  $18,150 ÷ 36 = $504

• Calculate the Interest Rate
  You have your monthly car lease estimate now, but you will also have to pay monthly interest rates. Both car lease and loan payments have interest rates. The money factor is used in quantifying the interest rate.
  Equation:
  (MSRP + Residual Value) x Money Factor = Interest Rate
  ($33,000 + $14,850) x 0.00125 = $59.81

• Add the Monthly Payment Estimate and Interest Rate
  Equation:
  Monthly Payment + Interest Rate = Total Payment
  $504 + $59.81 = $563.81

Keep in mind that the number you calculated is an estimate; local taxes and additional fees greatly affect car lease quotes. However, you now have a clear picture of a reasonable offer to compare with vehicle leasing companies. It’s also worth taking note that D&M Auto Leasing offers low, competitive interest rates, as well as real market residual values. Learn about our Leasing!

 

Drive a Nicer Vehicle

Buying typically limits you to more modest vehicles, preventing you from driving the vehicle you actually want. With leasing, luxury vehicles are capable of rates competitive to economy cars. Since luxury cars hold their value, their monthly rates can even be lower than more modest models. Leasing also allows you to take advantage of new car technology, and then upgrade to the latest innovation.

Drive a New Car Every 2-3 Years

Get more out of your car for less money. By leasing, you are driving the vehicle while it’s in its prime, and returning it before its use starts to show.

You may see not owning the vehicle at the end of the lease as a drawback. However, as the price of cars increase, people are financing them for increasingly longer. They do not realize that by doing so, they rarely own them outright.

No Down Payments

The title says it all, but most car lease deals require no money down. With D&M’s EZ Lease, you could lease with no down payment, and no payments for the first 60 days.

Lower monthly payments

You are only paying for the “use” of the vehicle, rather than the total value. The average lease is about 3 years long, while the average car loan takes 6.5 years to pay off, and is steadily increasing, resulting in interest rates far past the vehicle’s initial value.

Easy trade-in

Normal wear and tear is expected, so most car lease returns are as simple as turning in the keys.

Get a free, no hassle quote and find out is auto leasing is right for you!

3 Main Points to Consider when Fleet Leasing

Many trades require frequent travel, room for cargo, or even carpool capabilities. Relying on its employee’s vehicles to suit its needs may not be a viable solution. Such businesses need corporate cars to lend to their staff. If you’re thinking about buying or leasing a fleet, read the following 3 main points to consider to make the best decision for your business.

Money

The financial factors of buying versus leasing a fleet are top priority. Purchasing corporate cars provides valuable assets for your business, while fleet leasing costs less per month, freeing up funds for other sectors.

Accounting

How your fleet is accounted for also has a major impact on your taxes. There are two categories for accounting fleet leases: operating and capital.

• Operating leases are the most common type because it is free of liability of ownership. Operating leases obtain tax benefits for your company by deducting the entire lease payment from income statements.

• Capital leases claim depreciation and deduct the interest from lease payments. A capital lease is treated as an asset because you are considered the owner of the fleet. This means your company is responsible for fleet maintenance. However, your contract includes the option of purchase at the end of the lease term, most likely at a bargain. This is an appealing option if you are considering leasing, then transitioning to owning you corporate cars.

To ensure the best tax benefits for your business, discuss both operating and capital with your company accountant.

Incentives & Discounts

• If you have savvy negotiation skills, you may be able to strike a bargain with a dealer when buying. Make sure you research new cars extensively so that you know what you want, then shop around for the best offer.

• Fleet leasing companies already have established relationships with dealers, guaranteeing you the best deal. They may even implement discounts for large fleets.

Time & Hassle

Buying

• The extensive research and trips to multiple dealerships needed to get the best deal are very time consuming.
• Your business manages all the paperwork and data, such as consolidating invoices and expenses, as well as managing inventory for your fleet.
• Your business is responsible for handling accidents and replacing stolen vehicles.

Fleet Leasing

• Fleet leasing companies manage maintenance as well as repairs and replacements with quick turnaround and cheap rates.
• Your company only duties are to pay the monthly lease agreement and manage your employee’s gas mileage reimbursement.

Brand Appeal

It may sound vain, but your business’s appearance matters. Vehicles that are not well maintained hurt your image, while a quality, cohesive fleet of vehicles strengthens your brand’s appeal. When you purchase your fleet, this leaves you responsible for keeping the vehicles up to standard.

In Summary…

An operating fleet lease gives you the best tax benefits, while taking care of all the details, so you have the money, time and energy to spend on your business.

Amplify your company’s success with D&M’s fleet leasing today!