Three forms of auto financing
By Lucy Lazarony • Bankrate.com

A comparison of costs
Type of financing	Term	Monthly payment	Payment total	Paid in full?	Total price with cash payoff
Conventional loan 7.5% interest	36 months	$541	$19,475	Y	$19,475
Conventional lease 0.00264 money factor	36 months	$271	$ 9,762	N	$20,020
Lease-like loan 7.5% interest	37 months	$288	$10,642	N	$20,900
Sources: Palm Beach Toyota and The Payment Shaver Co.

For purposes of comparing monthly payments on loans, leases and the specialty, hybrid loans, we have assumed that the purchase price of the car is $17,392.50 and that after three years -- under either the lease or the lease-look-alike loan -- the residual value of the vehicle is $10,258.

Traditional loans and lease-look-alike loans carry interest. For traditional leases, interest is replaced by a monthly fee based on something called a money factor.

To arrive at the monthly lease fee, the purchase price is added to the residual value and then multiplied by the money factor. A Toyota dealer in West Palm Beach, Fla., said the money factor on his Camry LE leases ranges from 0.00254 to 0.00274, so we assumed the middle ground, and used a money factor of 0.00264 in our calculations. With a $17,392.50 purchase price on our car, the fee would be $73 a month ($17,392.50 + $10,258 = $27,650.50 X 0.00264 = $73.)

For the lease and the lease-look-alike loan, we assumed an annual allowance of 15,000 miles. In all cases, we looked at a no-money-down, three-year deal, and disregarded taxes and additional charges or penalties of any sort.

-- Posted: Dec. 2, 1998