Hi all. I’m planning to lease Škoda Kodiaq and I was hoping you could help me understand the financial conditions of the leasing that is offered to me. I don’t quite understand how exactly the interest rate of a leasing is applied. Attached is a photo of the leasing option I’ve selected (no down payment, I thought it would be better to rather invest the money than giving the cash to the leasing company and the total cost difference between the 0 / 5,000 / 10,000 down payment was insignificant - around CHF 100).
Could you please have a look and help me understand what exactly is the formula to get from the monthly payment to the total cost of the leasing (24 leasing payments + residual value). How exactly is the interest rate applied? Btw. I’m planning to purchase the vehicle back at the end of the 2-year leasing.
I will also welcome your opinions on the leasing offer itself. What do you think? Is it a fair one?
In theory it should be:
- Leasing rate = (Finanzierungsbetrag - Rücknahmewert)/duration
so in your example: (52’974.60 -33’870.61)/24 = 796 CHF (and not 755.96 CHF) → maybe there is some other info on the proposal which we do not see in the provided screenshot ?
The nominal interest is 1.99%, normally I’d say not bad, but in these times of 0% interests and car manufacturers desperate to sell it should be possible to get better ? Anyway, either you wait or you may try to negotiate a little bit…
N.B. pay attention to the conditions in case you decide to close the leasing earlier and not purchasing the vehicle
I made this calculation when I leased my car two years ago. I ended up with a spreadsheet that can predict the monthly rate returned by the AMAG software so, I am quite confident it does the right thing. However, it is quite a complicated calculation and most likely you do not need it.
You might not know how to get from debt + interest rate to total amount paid. But, the attached offer already provides all the results you need to take a decision. You know that you are financing total cost - residual value of the car → 52975 - 33871+8.1% = 16360 CHF. For 24 months, you are paying 756 CHF each month, which means a total of 18144 CHF. Therefore, you know that you are signing for paying 1784 CHF in interests over 2 years, no matter how they are calculated.
Now you have to decide yourself whether this is acceptable or not.
Btw. I’m planning to purchase the vehicle back at the end of the 2-year leasing.
IHMO, if you have already decided, you might as well pay for the car upfront or finance it somewhere else, potentially with a lower interest rate (SNB cut reference rate to 0%, just saying…). The main point of a leasing is the flexibility. If you do not intend to use it, you are paying more for nothing.
If you are still interested in the full calculations, I can write a more extensive post. However, be advised that it will be full of boring math.
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