Are you thinking about leasing your next car? Then a car lease calculator is an indispensable tool. In this special, we’ll show you how to use one to get the best deal Novated Leasing Calculator.

In the USA, leasing is all the rage. About a quarter of all customers decide to lease rather than buy their next vehicle. Here in the UK, we’ve so far been a bit less enthusiastic. And yet, more and more drivers are making the switch. Should you, too?

What do you need a car lease calculator for?

To answer that question, you’ll need to understand a few things that make leasing stand out from other forms of acquiring a car. First and foremost, you’ll need to crunch some numbers. Because, as attractive as it may seem on paper, leasing is usually the most expensive option at your disposal.

Leasing has always been the odd duck in car finance. It is still a fairly recent invention. It even uses a different vocabulary. And it offers great monthly rates, but still ends up being expensive. Most importantly, though, it has some unique benefits that no other type of financing can offer.

Even experts are sometimes confused about the pros and cons of leasing. This is why a car loan calculator is a must. It can give you exact answers to your financial questions within minutes. Plus, it will allow you to play with the variables to find the combination that’s right for you.

Curiously, there are not all that many car lease calculators out there. All the more reason to look for …

… the best car lease calculators

As we mentioned, car leasing is still pretty much in its infancy in the UK. This is why you will not find useful car lease calculators here. Not even on the website of WhatCar Leasing, which otherwise offers some excellent introductory articles on the topic.

Thankfully, the mechanics of leasing are the same as in the USA. So you can use car lease calculators designed for American audiences to work out the costs of leasing over here.

The two best tools

Probably the two best tools out there are by car valuation site Edmunds and the aptly titled calculatestuff.com.

Of these two, the Edmunds car lease calculator is the most detailed. It includes many unique elements, such as fees and rebates as well as the miles driven per year. These may not be necessary in all cases. But they will potentially make your calculations more precise.

For most purposes, the calculator by calculatestuff will be more than enough, however. It includes a downpayment, the trade in amount and all other fundamental variables. To understand how to use this tool, let’s take a look at the different elements of a car lease calculator.

The basics of leasing a car are similar to those of buying one. You borrow money, then pay off that loan in monthly instalments.

When you lease a car, you’re only using it temporarily. In most cases, you’ll return the car at the end of the agreement and set up a contract for a new one. The dealer can then sell the car as a used vehicle.

Financing works pretty much the same way. You don’t need to finance the full costs of the car, but only the difference between the current value of the car and its resale value at the end of the lease. Essentially, you are paying interest on the depreciation of the car.

The elements of a car lease calculator: Residual Value

The current price of the be car

It isn’t hard to see that a more expensive car will increase your monthly payments, while a size able downpayment reduces it. What about the residual value, however?