subject: Auto Insurance Leads: Computing For Your Car Lease [print this page] When you rent a car, it is easier to stick to the same company for your auto insurance. What you do not know, however, is that you can end up paying too much for your coverage and it is better to look elsewhere for lower prices.
For the self-consumer, computing power is one of the most difficult and confusing for the rental. Take the financial burden on a lease for example. Most people do not understand how this is calculated on the capitalized cost and residual value instead of just the capitalized cost. For most, it seems obvious, as is the case when the buyer a tax is levied on the capitalized cost of the vehicle.
Well, not quite! When you rent a car, you are only using the car at a specified time period with the option to buy the car. The residual value represents the balance of the loan at the end of the lease. If you add the capitalized cost and divide by two, you will get the average capitalized cost effective during the term of the lease. Suppose you rent a car with a $25,000 capitalized cost and residual value of $15,000. You average balance over the term of the lease, whatever the hour, is $20,000- the sum of the two divided by two.
Use this amount of work because the money factor is the annual interest rate divided by 24 instead of 12. Continuing with our example and assuming an interest rate of 6% APR:
These financing costs are added to calculate depreciation for the monthly payments on your lease. When you rent the car you drive up to the leasing company. They want to ensure that their investment is covered if the vehicle is damaged or stolen. In general, they want to recover the difference between what your auto-insurer pays and your lease obligations outstanding at the time of the accident or injury. This is called GAP, short for Guaranteed Auto Protection, and is generally included in the lease.
If the leasing company is called BMW Financial Services, Chrysler Financial or any other finance division of an automaker, then chances are your GAP insurance will be offered the same rental company.
You are under no obligation to accept GAP insurance included in part of the lease. Why pay an insurance premium if you could get the same coverage at a lower price? Invest some time shopping by comparing quotes from other insurance companies, including your existing one. Ask for discounts, you have access to and modification of coverage.
by: Michael SeoVida Francis
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