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## Comments

1Thank you

38,515Car_manvHost

Prices Paid: Buying & Leasing Experiences Forum

3144Take your rent charge... $4331

Divide by the term.. 48 months.

Result: $90.23/month

Add your net cap cost and your residual amount. Just as an example.. $20K + $11K = $31,000

Divide $90.23 by $31,000 = .0029.. This is your money factor

Multiply .0029 X 2400 = approx. 6.96%.. This is the equivalent APR of your lease, assuming your CAP and residual are the same as above..

regards,

kyfdx

What I want to understand in your example is what is the 6.96% applied against? In other words, what value exactly are you being computed the equivilent of interest against? II would have thought you should owe interest on the part of the car you are buying, or the depreaciation and amortization (i.e. the adjusted cap cost MINUS the residual value).

But in your example, for instance, that would be 20K-11K = 9K, But if I use a compound interest calculator against 9K over 48 months the monthly interest payment should be less than $30/month of the total payment, far less than the $90.23. So the "interest" must be calculated against something far larger than the amount being the equivilent of "borrowed" or used. The interest is larger even than if applied to the residual amount, but smaller than if applied to the entire value of the new vehicle.

Your help is appreciated.

34,063+$11KThe amount that is financed is an

averageof those two numbers.. You start out borrowing $20K (the cap cost), and end up owing the residual amount (which is satisfied by giving the car back).You owe interest on the whole car.. because, after all, you can't borrow just the part you use... you have to borrow the whole car... then, give back the part you didn't use.. Since you pay for the car as you use it, that amount gradually drops to the residual over the life of the lease.

So, technically, it is ($20K + $11K) divided by two.. But, the division calculation is accounted for in the money factor..

Hope that helps,

kyfdx

MODERATORPrices Paid, Lease Questions, SUVs

5What would we do without you guys??

138,515As you can see, GMAC publishes lease rates instead of money factors for Jeep vehicles. You can convert its published lease rates into approximate money factor equivalents by dividing them by 2400. So, a lease rate of 3.54% is equivalent to a money factor of around .00148.

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