Calculating leasing instalments: How the monthly instalment is made up

If you are faced with the question of whether you want to lease or buy a vehicle, the amount of the monthly leasing rate is also a factor that ultimately influences the decision. We tell you how the rate is composed, how it is calculated and answer other questions about leasing calculators.

Amount of the leasing instalment: The factors

In order to calculate the leasing rate, the car dealership and the leasing bank include various factors in the calculation with a car leasing calculator. In addition to the factors listed below, there is also the possibility of so-called full-service leasing. If you opt for this option, you will of course have a much higher rate, because it is an all-round carefree package. With commercial leasing, the leasing rate is usually cheaper than with private leasing due to certain factors.

If you want to try leasing for the first time and are not sure whether you can pay the monthly installments in the long run, then short-term leasing may be the right idea for you. And if you want to keep as many options open as possible, Vario-Leasing is the right choice. You have to decide for yourself whether Vario leasing or leasing suits you better.

With a classic car lease, the process is different, the leasing rates cannot be determined in advance.

For a classic lease, however, the following criteria are decisive for the calculation of the lease:

1. Deposit and special payment

A deposit may be required, but not every provider insists on it. The advantage of a down payment – also known as a special payment – is that the vehicle price of the leased vehicle is reduced and the monthly instalment is therefore also lower. If you want to sell an old vehicle, you can also ask the dealership if the car can be purchased and the price can be used as a down payment for leasing. In addition, a special payment may also be necessary if you do not fully meet the requirements for leasing.

Leasing without a down payment naturally saves you money that you can use elsewhere. However, the leasing calculator will then charge you a higher monthly rate.

2. Selected vehicle model and price

The most important thing is your desired vehicle, because the more expensive the vehicle, the higher the leasing rate. A small car leasing will therefore certainly cost less than a sports car leasing or a convertible leasing. In addition, it also depends on what basic equipment the vehicle comes with, because if it is particularly high-quality and exclusive, this is also included in the rate. Therefore, think about it beforehand and consult a car leasing cost calculator.

If your leasing application has been rejected, you can certainly try again with a cheaper vehicle and less monthly rate.

3. Contract Term

How long you want to lease your vehicle depends on you, of course - but the lessor has usually already specified certain terms, between which you have to decide. If you lease a new vehicle, you should not choose leasing periods that are too short, because the loss of value in the first year is high and if you only lease for a short time, you will end up paying more. However, leasing for too long does not make sense either. If you lease longer, the monthly instalment will be lower, but this could lead you to believe that you are losing value.

4. Interest rate

The lessor decides how high the interest rate is. As a rule, you don't find out how this interest rate is composed. However, this usually includes a share of the profits, administrative costs and a surcharge for the risk of not being able to sell the leased vehicle at the end of the term. However, there are sometimes limited offers that advertise leasing without interest, the so-called 0% leasing. A leasing calculator can only give you an interest rate as an example, it is better to have the lessor calculate an example directly.

5. Optional equipment

Think carefully about which optional equipment you want to have installed in your vehicle, because if it is particularly expensive or unusual equipment for this type of vehicle, you will pay a high price for the equipment itself and the leasing rate will also be correspondingly higher. In addition, the lessor charges a higher interest rate if he assumes that the car with this equipment will be difficult to sell again later.

 

Calculate leasing rate

You can't calculate the leasing rate yourself completely down to the last cent, but a formula for calculating leasing will definitely give you a good direction as to how much the monthly installment is. The formula for calculating the leasing rate is as follows:

(purchase price – residual value) / term + [(purchase price + residual value) /12] x monthly. Interest rate

This sounds complicated at first, but we'll walk you through the formula step by step.

The first part of the calculation is about the average depreciation over the entire term. You know your purchase price and the residual value is determined at the beginning of the leasing contract. Here, all possible risks are assessed and then a realistic value is determined that the vehicle is still worth at the end of the leasing period.

The second part of the calculation is about interest. These are determined as described and show what interest will accrue over the course of the leasing period. Divided by 12, you get the monthly charge. So the entire formula indicates how high the average depreciation is and how high the interest is. These two values together result in your leasing rate.

If you've ever stumbled across the word leasing factor in connection with leasing offers, you don't have to be confused. The leasing factor serves as a comparison factor for leasing offers and can be a decision-making aid.

Example calculation:

To make sure that the calculation does not remain so abstract, we will show you an example of how the leasing rate can be calculated. The conditions are as follows:

• Purchase price: 30,000 euros
• Duration: 48 months
• No deposit
• Interest rate: 3 %
• Residual value: 40% of the purchase price, i.e. 12,000 euros

Accordingly, the calculation in this specific example is

(€30,000 – €12,000) / 48 + [(€30,000 + €12,000) x 0.03/12

Depreciation: (€30,000 – €12,000) / 48 = €375

Interest: (€30,000 + €12,000) x 0.003/12 = €105

Total cost: 375 € + 105 € = 480 €

For our example car chosen here with the above conditions, a monthly leasing rate of 480 euros would therefore have to be paid.

 

What does residual value mean in leasing?

The residual value is calculated individually in the case of so-called residual value leasing. The model, the selected equipment, the term and the level of risk of being able to sell the car well in the end play a role here. From these factors, a residual value is determined in the contract at the beginning of the lease, which is to apply at the end of the term.

 

How high should the leasing rate be?

This cannot be said in general, because you have to tailor it individually to your needs and your wallet. If you need a lot of space, i.e. a large car, but can't spend that much money, it makes sense to weigh things up carefully. Maybe a station wagon is cheaper than the SUV you would have chosen? Don't be tempted by leasing rates that are too cheap, because it may be that either a high down payment has been included or a large residual value is created in the end.

Does car leasing make sense for private individuals?

In addition to commercial leasing, many leasing contracts are now concluded with private individuals. A common reason is that a new car only wants to be driven for a certain period of time. You don't have to worry about the sale, because the return has already been agreed. Everyone has to decide for themselves whether private leasing makes sense, because it is of course a monthly burden over a longer period of time.

How long should you lease?

This question is not so easy to answer, because of course it is your decision how long you want to keep a vehicle. From an economic point of view, it does not make sense to take out a lease for only 12 months, because the loss of value is highest in the first year. Leasing contracts are usually concluded for 36 or 48 months. Longer periods of time often do not make sense either, because the vehicle may then no longer have the value for which you pay the installment – the ratio is no longer right.