How to Lease a Car: Car Lease Payments and Depreciation
Car Lease Payments and Depreciation
As you know the longer you own any asset the lower the value of the asset unless of course we are talking about a Mona Lisa or the Trump Towers. With car leasing, you need to think of a lease payments as the amount the car depreciates (drops in value) while you drive it. How is this depreciation or amortization calculated? It is figured by subtracting the car’s projected value at the end of the lease (aka residual value) from the current retail price (MRSP).
Ok so if your car has a retail price of let’s say $25,000 and have a future value of $15,000 in 4 years (48mth lease), the depreciation is the difference between those figures, $10,000. Low and behold, you will be making payments on the $10,000.
Recent Comments