How do you figure out a True monthly car payment?

[Recon Racoon 49]

So I've been looking at leasing a new car to replace my aging, breaking f150. I've been considering getting a ford mustang because I get a decent discount for ford through my company. The thing I can't figure out is what would be the real monthly payment. On fords website, it comes up as 221 a month for the basic model, but would it really be? How much would I expect to add onto what I saw online?

 

This is the first time I'd be buying a new new car so I have no idea what to expect.

 

 

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[RubberBullets 65]

You could use an online auto payment calculator but a lot of factors really rest in your court. Given the chance to upgrade options, how much are you willing to spend total on the car? Do you want just a base model? The term of loan and the financing play a huge part and is essentially 2/3rds of the payment calculation.

 

I wouldnt expect to go to a dealer and find a bare bones model but it is possible. Stop by a dealer and see what the sticker prices are on some of the particular car you are looking at. Note that you can obviously get less than sticker price, but dont expect for them to knock 30-40% off the car. You can ball park your total car estimate and dont forget to add taxes (7% on the final cost) as well as title fees (approx $500 give or take) If you can approximate the final value of the vehicle you are buying within a grand or two, research the financing deals both Ford offers for a Mustang AS WELL AS independent car financing from say a car or a bank, and the term in which you are ok with paying for a new car you can get a pretty close figure as to your monthly payment.

[67gtonut 847]

You need to calculate the amount financed.....  

 

So:

 

Sale Price of Vehicle after dealer discounts

(-)

Trade Value if any

(+)

NJ Sales Tax

(+)

Doc Fees +MV Fees

(-)

Manufacters Rebates

(-)

Any Down Payment

(=)

Amount Financed

 

After getting that.....   plenty of loan calculators on the net to get the payment

 

PM me for any other advice

[Malsua 1,422]

So I've been looking at leasing a new car to replace my aging, breaking f150. I've been considering getting a ford mustang because I get a decent discount for ford through my company. The thing I can't figure out is what would be the real monthly payment. On fords website, it comes up as 221 a month for the basic model, but would it really be? How much would I expect to add onto what I saw online?

 

This is the first time I'd be buying a new new car so I have no idea what to expect.

 

 

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Not the answer you want, as there are too many variables...that said, don't be a payment shopper.

 

You are better off going through Chase Auto loan or similar and getting pre-approved for a specific amount that you're comfortable with. You then walk onto the lot and don't have to deal with a predatory finance manager who will get the payment you want but you'll end up with a 99 month loan at 18% interest.

[Vlad G 345]

For the TRUE cost also calculate in the difference in fuel costs. How many miles are you driving  and what millage is your F150 getting, vs the base model Mustang? You might find that you will be be $100 or more ahead with new car which in reality you should discount from monthly vehicle costs. 

 

Same thing with the repairs you are making on your truck now, averaged monthly. 

[M1152 713]

This is the first time I'd be buying a new new car so I have no idea what to expect.

 

 

Just be advised when you go to see the financial person in that little room that is where all the extra’s get suggested and added on like extended warranties, indoor/outdoor coating options, ding protections, wheel protection and things of that nature. That is where a $300 ballpark payment from out in the showroom get turned into a $450 payment 

[raz-0 1,259]

True cost. 

 

Figure out the configuration you are interested. GEt a vin of a car configured like that and call your insurnace people and ask them how much your insurnace will change. 

 

Figure out your current miles driven and MPG. Take a reasonable guess at MPG of future car. If you are a spirited driver and it is a turbo, it will be WAY less than advertised. that gets you gallons. Convert gallons to dollars for the appropriate octane. 

 

Look at the scheduled maintenance for the new car. Most of it will be flat fee. Call the dealer's service department and ask the fees. Add 10% to account for the fact they won't all be right now. 

 

Look at cost of tires. for Z rated or higher, don't assuem more than 2 years of service life out of them. 

 

It gets complicated, but two things to watch out for with the mustang are tires and insurance. They are expensive to insure. 

[DaveR 42]

Its always "Taxes, title and license fees extra"

 

Most of the responses seem to be based on a purchase.

 

No real variables on a lease. There is the amount due at signing, the title and license will probably add a few dollars to the monthly payment so a guesstimate would be 221 + 3 * 1.07 = 240.

 

Easiest is to just go to the dealer, and have them run the numbers for you.

You will most likely not get a base model so the 221 price will also increase.

 

Since it a discount from work, it would most likely be under the X - Plan, mention that to them.

 

I'd expect the insurance costs to go up noticeably as well.

[greatgunstatenj 32]

Not the answer you want, as there are too many variables...that said, don't be a payment shopper.

 

You are better off going through Chase Auto loan or similar and getting pre-approved for a specific amount that you're comfortable with. You then walk onto the lot and don't have to deal with a predatory finance manager who will get the payment you want but you'll end up with a 99 month loan at 18% interest.

 

I think this is the best approach. Unless you are really on top of your game you will get taken advantage of when it comes down to the financials. There is a reason dealers love to finance and love to lease... because they know how easy it is to make money off of people. Figure out how much you can afford and work from there.

[67gtonut 847]

Just realized he said lease....

 

No way for the average consumer to calculate a lease payment.....

 

FYI....  the sale price of the vehicle does not appear on most lease contracts....   so if you are going to lease.... you WILL be a payment buyer.  Only way to get thru this alive is to work one dealer against another on the exact car..... 

 

Watch your mileage terms .... extra costs at the end of the lease can be a killer

[raz-0 1,259]

Just realized he said lease....

 

No way for the average consumer to calculate a lease payment.....

 

FYI....  the sale price of the vehicle does not appear on most lease contracts....   so if you are going to lease.... you WILL be a payment buyer.  Only way to get thru this alive is to work one dealer against another on the exact car..... 

 

Watch your mileage terms .... extra costs at the end of the lease can be a killer

 

 

Not relaly. For lease you need to know the residual. Payments plus residual value is in effect the purchase price of the car. It may change. With a good turn in and a less than popular car, the dealer may turn aorund and offer you a sale at less than residual at the end. 

 

However, when buying or leasing a car, you need to figure out what it costs to own and if youc an afford that.... not what the monthly payment is. 

[67gtonut 847]

As usual...

 

all the experts are chiming in.....

 

I am out..... 

[pbkid6974 1]

Walk in tell them what you want to pay out the door And how long you want your loan to be. Figure in the interest and you've got your monthly payment.

[raz-0 1,259]

As usual...

 

all the experts are chiming in.....

 

I am out.....

Negotiating on the fly is beyond the average dude, but you can go with a target that let's you compare vs. a loan. Figure out invoice, the markup you'll tolerate, and hit up a decent loan calculator. You now have total payments. You can compare vs. payments and residual. It isn't perfect, but it's better than nothing.

[Recon Racoon 49]

I was just using a base model mustang as a guess base. I'd really like to get a GT but that's a pipe dream, so I'm aiming for just the V6 coupe with some add ons. I crunched some numbers a little while ago budget wise and with out getting into the details of my financial life (I'm not married to any of you lol) I'd be able to swing a payment of around 240-250 but really want it to be as low as possible. And in my research on leasing was really turned off on all the little hidden fees they throw in there to make you pay through the nose.

 

As far as insurance goes, I already found one that would be around 135 a month after the down payment which is only 25 dollars more than what I'm paying now for my truck.

 

I haven't even test driven anything yet, so my decision may change...

 

 

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[Murphy4570 15]

Don't lease a car. Ever. Your making rent payments on something that depreciates in value horribly. In the end you will have nothing to show for all the money you spent.

[Recon Racoon 49]

Compared to financing where I'd be paying three times a month. For me it all comes down to what I can afford. And the simple fact is I can't afford to finance a damn thing. So I'm stuck with leasing or buying used.

 

 

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[gleninjersey 2,141]

Don't lease a car. Ever. Your making rent payments on something that depreciates in value horribly. In the end you will have nothing to show for all the money you spent.

This. Buy a gently used car that you cam afford. Don't let your ego get wrapped up in the decision. You only need a car to reliably get them from point A to Point B.

 

Cars are one of the most expensive items a person will ever own. A new car depreciates at LEAST 25% by just driving it off the lot. Buy a gently used car. Let some one else pay the immediate depreciation discount. Maintain it nicely and should last at least 10 (hopefully man more) years. You'll save a great deal of money over leasing every 2 years.

 

Murphy is wrong about one thing. At the end of your lease I guarantee you will have another down payment due with nothing to show for all the money you just laid out for the past 2 years.

 

Imagine replacing the word car with gun. Would you rent your gun for 2 years and then have to lay out more money in 2 years to rent another gun? Never owning it but always having to pay a monthky fee for it......FOREVER

 

Good luck.

[Howard 538]

OK here is more food for thought.  Never go in and tell them you want to lease a car!  Go in and negotiate a price to buy the car outright.  Also as mentioned leases are based on residual value, so know what the residual is for the time period you want to lease.  Sometimes it is cheaper to lease a very expensive car than a cheap model because the expensive one holds its value.  You pay for $15K over three years for a $45k car that is worth $30k at the backend, and you pay roughly that same $15k for a $30k car that is worth $15k at the back end.  Also there are times when a company wants to move a certain model so they set an unrealistically high residual - which helps you big time.  I recall years ago leasing several Mercury Mountaineers for two year leases as they wanted to put them out there, even though it was a higher level trim than the Ford Explorer I was able to lease it for a LOT less money.  Next you need to know the money factor rate, that is lease talk for the interest rate.  By negotiating a purchase price you have now locked in the deal and there is no room for them to screw with you.  The payment will be the price you negotiate, less the residual value times; that amount multiplied by the money factor rate.  If you don't lock in the purchase price they will typically use the sticker price or some slight discount and you will pay more that if you negotiate a real sales price first.  Also be prepared to walk out, and walk if you don't like the deal.  I have done this many times and had dealers call me multiple times dropping the price each time to get me back.

 

Also if you lease make sure some sort of gap protection / insurance is included.  Remember the minute you drive the car off the lot its value drops by quite a bit.  If you totalled the car on the way home (let's hope not) the insurance company would not pay you what the car was worth - they might only give you 90%.  You would be responsible for that extra 10% without some sort of gap protection.

[67gtonut 847]

OK here is more food for thought.  Never go in and tell them you want to lease a car!  Go in and negotiate a price to buy the car outright.  Also as mentioned leases are based on residual value, so know what the residual is for the time period you want to lease.  Sometimes it is cheaper to lease a very expensive car than a cheap model because the expensive one holds its value.  You pay for $15K over three years for a $45k car that is worth $30k at the backend, and you pay roughly that same $15k for a $30k car that is worth $15k at the back end.  Also there are times when a company wants to move a certain model so they set an unrealistically high residual - which helps you big time.  I recall years ago leasing several Mercury Mountaineers for two year leases as they wanted to put them out there, even though it was a higher level trim than the Ford Explorer I was able to lease it for a LOT less money.  Next you need to know the money factor rate, that is lease talk for the interest rate.  By negotiating a purchase price you have now locked in the deal and there is no room for them to screw with you.  The payment will be the price you negotiate, less the residual value times; that amount multiplied by the money factor rate.  If you don't lock in the purchase price they will typically use the sticker price or some slight discount and you will pay more that if you negotiate a real sales price first.  Also be prepared to walk out, and walk if you don't like the deal.  I have done this many times and had dealers call me multiple times dropping the price each time to get me back.

 

Also if you lease make sure some sort of gap protection / insurance is included.  Remember the minute you drive the car off the lot its value drops by quite a bit.  If you totalled the car on the way home (let's hope not) the insurance company would not pay you what the car was worth - they might only give you 90%.  You would be responsible for that extra 10% without some sort of gap protection.

 

All sounds good in theory.....   but like I said....   you can lock in whatever PURCHASE price you want....   it does not matter....   

 

Once you convert to a Lease, you are not buying the car anymore...  they can then go right back to MSRP or whatever to calculate the payments....    

 

 

But everyone ..... go ahead....  carry on...  

[Howard 538]

Troy you are correct they can do whatever they want, but you will know what you are getting or how badly they are trying to screw you. Back when I used to lease vehicles I always used this method and either got my price or walked away. Usually when I walked away they called me back and I got my price. YMMV

[67gtonut 847]

Troy you are correct they can do whatever they want, but you will know what you are getting or how badly they are trying to screw you. Back when I used to lease vehicles I always used this method and either got my price or walked away. Usually when I walked away they called me back and I got my price. YMMV

 

Correct....  because all the negotiating you did almost goes out the window....   You need to either walk out.... or shop the exact car.... at another dealer and make them compete to move the unit

[Howard 538]

Correct....  because all the negotiating you did almost goes out the window....   You need to either walk out.... or shop the exact car.... at another dealer and make them compete to move the unit

Well Troy, we agree to disagree on this one.  If you are just saying I don't like your $299 a month payment and want to pay less you are negotiating from weakness.  You have no clue if $299 is a good or a bad price.  If they tell you ok, we'll go to $289 you don't know if you just got a good deal or are still being screwed.  When you go in and have a price for the car, a residual, and a money factor you now have the power to make a good decision.  If you know that based on those three things the lease payment should be $259 then you know to be prepared to walk if the best they will do is $289.  Its really that simple.  Will they ultimately make the deal at $259 - well you are right there is no assurance they will.  But, I rather know the facts than bargain with a hood over my head not being able to see what is going on.

[45Doll 5,877]

To me the total cost of the lease is the number that counts. That number is of course affected by the down payment, term of the lease etc. But if you want to compare apples to apples, you must use the total cost of the lease (capitalized cost, gap insurance, taxes, fees etc.), especially if comparing one lease arrangement to another.

My 'monthly payment' is $357.39 on a 36 month term. But the total cost of the lease divided by 36 is $458.57. Quite a difference.

I consider the 'total cost of the lease' to be the adjusted capitalized cost minus the value of the purchase option at the end of the lease. Whether or not I exercise the purchase option is a separate decision.

I don't bother with mileage calculations as long as I'm considering similar vehicles. But don't discount the cost of insurance on a new car versus a used one. That is usually a significant difference, and the leasing company will require you to protect their property completely.

Just for reference, I bought a brand new Olds Intrigue in 2000. After 13 years and 165,000 miles the true monthly cost to own that car (purchase price, mainentenance and repairs less the resale price) was $285 a month. That number gave me a feel for whether the upcharge to lease a new car was worth it. I'm effectively paying $174 a month extra to drive a new car rather than my 13 year old Intrigue. That was the decision I had to make.

One other thing. When you own a car and have a bad accident and serious repairs, that fact bites you at resale time. If you lease a car and have the same accident, at the end of the lease term you walk away and it's the leasing company's problem.

[Vlad G 345]

Personal opinion warning:  Unless you plan to change cars every 3 years or are really short on monthly funds, leasing doesn't make sense to me.  I keep my cars for 10+ years, so for me the notion of buying a car makes more sense. Additionally, if you shop wisely you can often buy a car right before a new model comes up and be able to negotiate down the price considerably plus if your credit is good and they really need to sell cars you can get the various ultra low interest rates (down to 0%).  Given that inflation is almost always a lot more, I like the notion of very low rates, because the next leased car in 3 years might be 3-10% more expensive just because of inflation.

 

However, if you need a car right this second, and you can't afford high monthly payments, whatever low cost lease you can get right now can make sense. If your really want to change cars every 3 years, then again it makes sense.

[45Doll 5,877]

I hear you Vlad.

 

My only other comment is that when I calculated that I actually spent $285 a month on that Intrigue for 13 years I was shocked. I thought the cost would be much less; but it wasn't. And my records for the car are accurate to the penny.

 

The other interesting thing is that in the last three years of my ownership, I spent HALF of the Intrigue repair and maintenance money, including a new transmission. BUT, if I had sold the car at the 10 year mark to avoid that extra 50% cost guess what... my monthly cost would STILL have been $285!!! Primarily because the original price would have been spread over 120 months instead of 163.

 

So if I leased a new car at a total lease cost <= $10,260 (285 x 36) I would be spending less than I spent on my Intrigue, but driving a new car. (Although certainly not as nice as that Intrigue was.)

 

My bottom line is: there's no substitute for doing the arithmetic. That exercise shattered some assumptions I had made.

[Vlad G 345]

Fair point, but that assumes that the lease rates and costs are the same for the next 10 years. You are betting that leasing will be as cheap as it is today in 3 years and in 6 and in 9.  Your purchase rate is what it is today so you know what you are betting on.  For my  money, I rather bet on the known vs the unknown, but you do have a far point that would be driving a newer car for all those years, with less reasons to worry about unexpected repairs, new tires, etc.

[Howard 538]

There is more to it than just cash costs.  There are all the intangibles that a new car may offer that the old one does not.  You hit on repair costs, but their is also the cost of your time and the aggravation cost of the repairs.  Then their is the issue that each year cars seem to get better gas mileage, so the newer car may also cost you less to operate than the older car.  Next you have to look at the additional safety features that they add each year, whether you want them or not.  The addition of such things over time as airbags, antilock brakes, collision avoidance features, traction control, auto braking, etc.... might actually save your life - what is the value of that?

 

The bottom line is that you really can't just look at the bottom line.  Would you be happier and safer and lest hassled with a new car every year, or would you be satisfied with the 13 year old car?  Me, I have done it both ways and I don't suggest to tell anyone which way is the best.  What I have heard is that if you really want to cheapest total cost is that you should buy a lightly used two or three year old car and then drive it till it dies.  But that is just what I hear.

[Recon Racoon 49]

If it comes to breaking down costs, I can already tell you a new or newer used car is going to be less of a financial burden repair wise. In the year I've had my truck I've replaced the fuel pump (rear tank), master brake cylinder, and had to have the front tank closed off ( total cost to repair that is 600 at a shop 350 myself). Only paid 850 for the truck so I'm starting to hit close to what I paid for it.

 

Now I did start looking at used cars, and found a 2006 mustang for under 9500, and a used car loan with small down payment would make it very affordable over buying new and paying thru the ass for it. Especially after seeing what my last check was...

 

 

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[45Doll 5,877]

Fair point, but that assumes that the lease rates and costs are the same for the next 10 years. You are betting that leasing will be as cheap as it is today in 3 years and in 6 and in 9.  Your purchase rate is what it is today so you know what you are betting on.  For my  money, I rather bet on the known vs the unknown, but you do have a far point that would be driving a newer car for all those years, with less reasons to worry about unexpected repairs, new tires, etc.

True Vlad. Also you too Howard.

 

I guess I was only trying to address the cost of the lease. Or in other words, how much are you willing to pay to use a car each month?

 

Regardless of someone's views on all the other personal variables mentioned, if you're looking to lease find out what the total cost of the lease is and use that to compare one lease to another. That won't affect whatever other personal requirements you have, but it will tell you what lease is cheaper, what the true cost per month will be over the term, and allow you to compare that to your own used car information and costs.

 

Again, I was just shocked when I realized it cost me $285 per month to drive that Intrigue for 13 years. I thought it would be much lower. I made a false assumption that buying new, totally caring for the car, and driving it for a long time would be the most economical. And it is more economical than leasing a new $30,000 car for 36 months. But, in my view, not THAT much more.

 

When the current lease is up I may look seriously at one of the $169/month specials somewhere. That would mean the total lease cost would come in under what I was paying for my Intrigue. IF I'm willing to run around in a bare bones whatever.