More and more individuals are opting for leasing a car rather than buying it due to the lower monthly payments and the ability to change up the car every few years. Leasing a car can be a great convenience for those who love the latest tech and newer models. Whether it is your first time or not, you must be curious about how much is a lease on a $45,000 car. Well, the answer is it depends on many different factors such as the size of your down payment, any manufacturer’s incentives, credit score, and negotiations with the dealer. In this article, we will not only give you an idea of how much you will pay on a lease for a $45,000 car but also educate you on how to get the best lease deal.
So let’s jump right in and learn what a car lease entails.
Car Lease in a Nutshell
Unlike a traditional purchase of a car where you simply pay cash or finance a car for 4 to 6 years with payments, a lease is simply a long-term rental between you and the finance company. Typically, you’ll sign an agreement anywhere between 2 to 3 years, and at the end of it simply return the car back to the dealerships with no strings attached. Leases also have smaller payments since you’re not paying for the full price of the car but just the depreciation amount plus interest on it. Regardless of market conditions, you simply enjoy your car for a fixed monthly payment and you can either replace it with another lease or just drop it off. Leases are ideal for people who don’t like to have the same car for too long of a time.
The downfall in comparison to a car purchase is that with a lease you are not paying down on equity and at the end of the term the car is not yours. Although you do have an option of buying up your lease at the end of the term it might not be as financially wise as buying it in the beginning. You also have mileage limits and you may have to pay fees at the end of the lease for any miles you drive over or if the car is in really bad shape outside of normal wear and tear.
If you feel pretty good about the overview of a car lease, the next thing to learn is how a lease payment is calculated.
Factors That Have an Impact on the Lease Cost
Before you try to get a lease or go for the best deal you must understand what is all that goes into calculating a lease payment on a $45,000 car. So let’s break down each factor below and see how it can affect your lease:
Residual Value: Since the lease payment is based on the depreciation amount during the lease term, cars with higher residual value will have much lower monthly payments. So even though you may be looking at cars in a $45,000 price range they may all have completely different lease payments due to this residual value. As an example, a Toyota Highlander will have a much better payment than a same-priced Audi Q5.
Interest Rate: The finance company will charge an interest rate on the depreciation amount they calculate, which will have an effect on the overall monthly payment.
Down Payment: The higher the down payment, the less your monthly payment will be. However, you have to remember that is not something you’ll get returned to you so you don’t want to over-commit on the down payment.
Mileage Limit: You’ll typically have an option for 7,500, 10,000, 12,000, or 15,000 miles allocation per year. The less you drive the lower the payment and the more the higher.
Credit Score: Last but not least is your credit score. The better your credit score the better interest rate you’ll get so it will make your payments much lower.
Understanding these terms will help you get an advantage in lease negotiations and calculations which we will do next.
Calculating the Lease for a $45,000 Car
Now that you know all the factors involved in a lease from the previous section let’s see how much the payment would be for a $45,000 car. To calculate this number we take the total MSRP of the vehicle which in this case is $45,000 and calculate the residual value that would be left at the end of the lease. The residual value will vary depending on the car you pick with some having residual values of 50% and others at 80%, for the sake of this example let’s go with 65%. This means that the residual value left at the end of the lease would be $29,250 on a 3-year lease. Leaving us with a depreciation amount of $15,750 which we got by subtracting residual value from MSRP.
The depreciation amount is what is being paid for during the lease plus interest, which is 2% to 6% which is known as the money factor. Assuming you have great credit with a 2% rate you’d be looking at $623.12/mo on a 3-year lease. Of course, this is not calculating any taxes and fees or additional product add-ons like warranties or service packages. It is also not calculating a down payment which would offset these charges in the first place. It is safe to say that you can expect to pay anywhere from $580 to $700 per month depending on the deal you get, credit score, down payment, and lease length.
Approaching a deal from a numbers perspective will allow you to know what to expect from your payment and bring light to any lease deal. However, there are more to getting a great lease deal than just crunching numbers, let’s see what else can done next.
How to Secure the Best Lease Deal?
When shopping for a lease it is important to know that what the dealer offers is not set in stone and there are many things you can do to get the best deal. Let’s review them below:
- Improve Credit: If you don’t already have perfect credit, then start working on it by paying down some of your loans and clearing any discrepancies. The better your credit the better your lease deal will be.
- Bigger Downpayment: If you put more down than usual the finance company will provide you with a better deal and your payments will also be lower.
- Negotiate: One of the biggest mistakes people make when shopping for a lease is thinking that you can’t negotiate but this is not true. Since the lease is determined by the depreciation value of the car you want to negotiate the MSRP down as you would on a regular purchase. By doing so you’ll reduce your monthly payment further. You can do this yourself or you can work with a lease broker who will get this done on your behalf.
- Shop Around: Don’t settle for the first deal you get but call around and see what other dealers can offer you for the same car. Also, remember that even if you really like a particular make and model, there may be competitor brands in the same price range who have better incentives at the moment and higher residual values, which can make a massive difference in the monthly payment.
- Use a lease broker: If you didn’t know there are some companies that specialize in securing a lease on your behalf. A lease broker has access to all the car brands and knows all the specials in the country. Regardless of where you live, they can find, negotiate, and bring a car to your front door. Lease brokers will not only get you the best deal they are also expert negotiators and will guide you through the entire process. By hiring a lease broker, you don’t have to worry about all the steps since they will do all the leg work for you.
Speaking of lease brokers, here at DriveOZ we specialize in helping our clients shop for leases with any dealer in the country. DriveOz is one of the few online platforms where you can start and finish your entire lease purchase online, plus you get an assigned lease advisor to help you. Our highly trained staff will use one credit application to scour the entire marketplace to deliver the best deal to you. We start out by finding out what you are looking for, your qualifications, and how much you can put down and pay monthly. After that, your assigned agent will see which dealers have the best offers and specials along with checking to see if they have your specific car model. Once the car and best deal are located they will negotiate back and forth with the dealer and use other dealer’s offers to get you a deal all your friends will be jealous of.
These are all amazing reasons to work with a platform like DriveOZ, so let’s summarize everything and get you started on your online lease journey.
Leasing a car that costs $45,000 does have to be a complex endeavor but it does require you to know a few things that affect the lease like residual value, interest rate, down payment, mileage limit, and credit score. By educating yourself first you’ll be more prepared to get a much better deal if you are negotiating yourself and you’ll be more aware of the process if you’re working with a broker. Based on the residual value we picked of 65% and 3% interest rate we know that the payment will look like $580 to $700 per month. And of course, there are a few things you can do to have a lower monthly payment than that by looking at cars with higher residual values, improving your credit score, and having you or your broker negotiate down the MSRP of the car. Just like any other car transaction leases can be negotiated and modified. It is also recommended that you work with an online car broker platform where you can shop for cars on their site and let them do all the work on your behalf while you sit back and sip on a nice cold glass of refreshing beverage.