Ratio of Net Cap Cost to Monthly Payments and Down

Shopping around I’m finding some discrepancies in the ratio of the net cap cost to the monthly payment and drive off. For example in talking to sales people I get a lease quote for a base model of 179 month and 2000 down for a 43k msrp car. Then I ask about adding options and now it becomes a 52k car, and I get quoted $289 a month for 2000 down, so I say what if I increase the down to 2200?, I still get $280 a month. Now the MSRP only increased $20% from 43k to 52k, assuming the discount percentage off msrp is the same and the down payment is increased by 20% shouldn’t the monthly payment only increase by 20% to around $215 a month? Using normal lease calculators on bankrate.com the lease payment only increases the same percentage of the net cap cost as long as the down payment is increased the same percentage. Although the leasehackr calculator when selecting BMW, the monthly payment went up 38% when increasing the msrp by 20%, applying the same 5% discount of msrp, and increasing the down payment by 20%. Still a difference of 38% vs 20%, not as bad as what I was quoted as a 20% increase in msrp to a 60% increase in monthly payment.

What am I missing?

You are missing… everything. And you over-complicate things. If it’s the SAME model, but with different options - that means residual and MF are the same (unless it’s a Lexus - I don’t know if options have affect on residual). So when the payments increase by $110/mo and everything else stays the same, it tells you that the sale price on the $52K car was about $3,700 higher. That’s all. $1K change in sale price equals about $30/mo. Hence - if you increase down payment by $200, it will knock off about $6/mo.

Thanks for the reply and with all due respect I was wondering the math behind it, not for a rule of thumb. Do you have the math behind those rules of thumbs?

It is not a “rule of thumb” - it is the math behind every lease. You get quotes from a dealer and, in the end, two people settle on the sale price and other monetary issues.

In a lease, the total cost of the lease you are basically paying the difference between the sale price and how much the bank estimates the car will be worth at the end of the lease. Otherwise known as depreciation.

So if you have a car that holds its value well on one end and can be sold by the dealer at a discount with lots of factory incentives on the other end, these two factors will result in a very low monthly lease payment.

In both a lease or a finance purchase, the dealer gets paid by the bank the same way.