A reverse auto loan is a type of auto lease in which the borrower (the "lessor") purchases a car from the lender (the "lessee") and then sells it back to the lender at a certain point in the future for an amount greater than the original purchase price. The difference between the original purchase price and the sale price is called the "residual value," and the borrower is typically required to make a down payment on the car that covers the residual value. Reverse auto loans are typically used by individuals who want to own a car but do not want to commit to a long-term auto loan.
Reverse Auto Loan Calculator
There are a number of websites that offer reverse auto loan calculators. These calculators can be used to estimate the monthly payments that the borrower will make, as well as the residual value of the car at the end of the lease term. Some of the websites that offer reverse auto loan calculators include:
* [Bankrate.com](https://www.bankrate.com/calculators/auto/reverse-car-lease-calculator.aspx)
* [Edmunds.com](https://www.edmunds.com/car-leasing/reverse-car-lease.html)
* [Leasehackr.com](https://leasehackr.com/calculator/)
How to Use a Reverse Auto Loan Calculator
To use a reverse auto loan calculator, you will need to provide the following information:
* The purchase price of the car
* The down payment amount
* The lease term (in months)
* The interest rate
* The residual value of the car
Once you have entered this information, the calculator will automatically generate a monthly payment and total lease cost.
Example
For example, let's say that you want to purchase a car that has a purchase price of $25,000. You have a down payment of $5,000, and you want a 3-year lease with an interest rate of 2.99%. The residual value of the car at the end of the lease term is estimated to be $15,000.
If you use a reverse auto loan calculator to enter this information, you will see that the monthly payment for this transaction will be $399. The total lease cost (including the down payment and the monthly payments) will be $14,964.
Conclusion
Reverse auto loans can be a good option for individuals who want to own a car but do not want to commit to a long-term auto loan. However, it is important to compare the terms of multiple reverse auto loans before choosing a lender.
