Hi all, I received 2 leasing offers from a car garage, but I don't understand their interest calculation, maybe someone has the relevant experience, please guide me, thanks.
Car price is 21640 CHF
Offer 1:
Kaufpreise: 21640 CHF
Rest value: 16000 CHF
Leasing month: 48
Interest rate: 5.4%
Monthly payment: 202 CHF
Offer 2:
Kaufpreise: 21640 CHF
Rest value: 2500 CHF
Leasing month: 48
Interest rate: 5.4%
Monthly payment: 453.45 CHF
My understood is:
Leasing offer 1: leasing amount is 21640-16000=5640 CHF, monthly pay 202 for 48 month is 9696 in total, means interest cost is 4'056 CHF totally
Leasing offer 2: leasing amount is 21640-2500=19140 CHF, monthly pay 453.45 for 48 month is 21765.6 in total, means interest cost is 2'625.6 CHF totally

Why offer 1 leasing amounts are lower than offer 2, but total interest cost is higher? does anyone have experience there? thanks.

Hi All, because my leasing agreement is going to end, I received a leasing extension offer from garage as following:



I understood the financing part is 5'640 CHF (21640-16000), but monthly payment 202 for 48 month will be 9'696 CHF in total, is it means the total interest cost is 4'056 CHF (9696-5640)? why it is so high? seems the interest rate will more than 5.4%.

Does anyone have experience there? thanks.

are you sure downpayment is the same in both scenarios?

You pay interest for the financed amount. In offer#1, the financed amount is 16'000 CHF, while in offer #2 it's 2'500 CHF. Don't know the details on how to get to the results of the offers, but in principle it makes sense that you pay more interest for a larger financed amount.

But, some details are missing here. I'd assume offer #1 implies driving 5K km per year or so, while offer #2 is about 20K km per year. That would explain the huge difference in residual value.

Both offers make sense, you can validate using the PMT formula in Excel.

Your assumption about the “financed portion” is incorrect. Because the whole purchasing amount is financed not just the difference between the purchasing price and the residual value (i.e. the amortised amount). Would be too good otherwise if one could get a loan for 5k to drive around in a car worth 20k and only pay back principal + interest on 5k.

The payments account for interest on an amortising basis down to the residual value.

Intuitively it also makes sense as you own more of the car in example #2 (you have to pay much less to own the car outright at the end of the lease) hence you pay more monthly to bring down the residual value.