Calculating a Car finance Payment is easy once you know what the payment is composed of! Plug in the numbers to work different payment scenarios for yourself.
Down Payment: This is the optional amount of money you can purchase a new vehicle with to help reduce your monthly payment. Down payments are generally a good idea if you have the available money because they make it easier to get approved by the business office at a good rate, even if your credit isn’t the strongest. Most leases advertise a downpayment, which help ensure the client get’s approved at the advertised rate.
Sales Tax (%): This is the HST that is mandatory on the purchase of every vehicle. In Ontario, HST is 13%.
Tip: On a lease, you only pay the HST on the portion of the total amount of the vehicle’s value over the lease term.
Trade-In: Most dealerships provide trade in tools which give you an approximate value for your vehicle. The data is based off of vehicles for sale in the current market, as well as auction transaction data. Generally these values are understated, however they give you the starting point for negotiations.
Tip: When you trade in your vehicle, you reduce the total price on the new car, which subtracts from the total amount of HST required. If your vehicle may be worth over $20,000, you are better trading it into a dealership to get the tax benefit on your new car. Learn more about your car’s value here: https://www.carfax.ca/car-valuation/
Why is the biweekly payment cheaper than a monthly payment?
A monthly payment is : (the vehicle total / year’s financed) / 12
A biweekly payment is : (the vehicle total / year’s financed) / 26
This is because there are a total of 52 weeks in a year, and not every month is a perfect 4 week period. Sometimes they are 3.5 weeks, and sometimes they are 4.5 weeks.
Let’s say a vehicle cost after taxes and fees is $12,000, and you are looking to finance it over 5 years at 0% interest.
The monthly payment : (10,000 / 5 years) / 12
(2000)/12 = $167
The biweekly payment : (10,000 / 5 years) /26
(2000)/26 = $77
Can I calculate a lease on my own?
Leases are trickier to calculate because they are based on the vehicle’s approximate value after a given period of time and kilometers. The lease is based on a certain % of the vehicle’s estimated value, and the leftover amount is known as the residual. The lease value is determined by a body known as ALG (Automotive Lease Guide) to help predict a vehicle’s future value. In a lease by a major manufacturer, the end value is guaranteed. This value changes on a monthly basis which makes it difficult to calculate a lease on your own, unless you have the (ALG) residual values. If you want to learn more about leasing as an option, complete our form and match with a Conquest Consultant who will help you find the perfect vehicle