In a leasing contract, the company leasing the vehicle calculates the rental payments by adding its own profit to the amount spent on purchasing the vehicle, taking into account the economic lifespan of the asset. The initial economic value of the asset (which we could also call the purchase price) and the added installment differential (this differential can be fixed or variable – usually based on the relevant country’s credit indices such as TLREF, LIBOR, FIBOR – or calculated considering indices like PPI and CPI) and the asset’s economic value at the end of the lease period (residual value) are considered in the calculation.
In other words, it is possible to make fixed installment payments, or the payments can be indexed to inflation rates or fixed/variable interest rates. At this point, companies that use fixed rates should be preferred. The interest here is not a typical loan interest but is used as a measure to calculate the installment differential. However, when variable rates are used, fluctuations in money value and interest rate changes, depending on the policy and preference of the leasing company, can legally result in variations in lease payments. This is a factor that affects the validity of the contract.
Therefore, during the contract, one should pay attention to whether the criteria used in the calculation (‘money factor/lease factor/lease fee’, interest rate) are fixed or variable, and the fixed criterion should be preferred. In lease calculations using fixed criteria, monthly installments are standard and unchanging. This means that one knows in advance how much will be paid each month and the total amount to be paid by the end of the contract. Thus, a vehicle can be leased with fixed installment payments.