Audi2589

I am trying to calculate how much I would be spending if decide to do multiple security deposits. From my research I see that this can be thought of as an investment. How would I calculate my return on investment? Would it be the total I am saving per month times lease term divided by the total of the MSD?

So if my monthly payment is 655 with no MSD but is 630 with 9 MSD, my return based on 36 months would 900/5850 = 15.89% ? Not sure if that is correct. That percentage seems too high to me. Can someone help me out?

VM

The math is mostly right, except that most interest is computed annually.

So, your return is 25 * 12 = 300/year. $300/5850 = 5.12% annually. Risk/tax-free.

That actually seems kinda low to me, though. Up here, when I got my car, I think the return on MSDs was closer to 9-10%...

Audi2589

Thanks. Wasn't sure if it was based on the term or yearly. And I made up those numbers. They aren't the actual numbers I would be getting so it's possible that my rate will be higher.

Audi2589

Another question. The amount that I have to put towards each security deposit, is it rounded up to the nearest $50 based on the monthly payment with the original money factor or based on the monthly payment with the money factor after the .00005 reduction is applied?