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Old 03-09-2015, 06:28 AM
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dwlink dwlink is offline
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Location: St. Louis
Join Date: May 2007
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Mein Auto: 435i Gran Coupe
Originally Posted by Aileron View Post
Fantastic job. You made a clear, concise and easy-to-use applet that breaks everything down in a format that's very understandable.

Not only does it make it easy to see what payments would be with various options, comparing the lease versus purchase is made easier.

However there's no helping those who don't have a finance background or understand the mathematics of net present value. In the event that you were wanting to tinker with your pricing template, one aspect I think we'd all find useful is the net present value of any of our various choices.

For those not in the know on NPV, many people simply look at which has the lowest total at the end. Unfortunately that's easily skewed by irregular payment streams to include refundable security deposit's, down payments, and balloon/residual payments.

One recent lease versus purchase article I read used an example where basically the lease and finance came out to be almost the same over 5 yrs. However the way they did it was with very low monthly lease payments for three years as usual. But then to make it equivalent to the finance deal, simply finance the residual value over the last two years so you compare 60 month versus 60 month term's. However what you actually end up with is something like a $500 a month payment during your 36 month lease term and then $1200 payments for the last two years. Yes, by adding huge payments at the end you can bring the costs in alignment but they may not meet with peoples actual budgets. So the whole comparison really is difficult to do without a very simple final check figure - which would be a net present value. Where the net present value would simply be today's value of that stream of payments. So it would be your real today's cost of entering into that agreement.

I used to write those formulas in Excel or use a program called TValue to figure NPV. Wish I could help more but it's been probably 12 years since I've done it and a bit behind the power curve on that type of thing these days. But otherwise very helpful. Thanks for your efforts.
Thanks for the comments and suggestion!

I have the whole NPV thing in the works as well as another drop down option to prioritize whether your trade goes towards cap cost reduction or security deposits first. There will be a new sheet in the next version that shows the amortization schedules - working on making it look clean and dummy proofing right now.

2015 BMW 435i GC MSport (ED Sept 29, 2014)
2004 BMW 530i (retired)
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