1. What is a Car Lease Payment?

A car lease payment consists of two main components: depreciation (the vehicle's value loss during the lease) and finance charges (the cost of borrowing). The monthly payment is the sum of these two amounts.

2. How Does the Calculator Work?

The calculator uses the standard lease payment formula:

Where:

• \( Dep \) — Depreciation portion of payment ($/month)
• \( Fin \) — Finance fee portion ($/month)
• \( MP \) — Total monthly payment ($)
• \( CC \) — Capitalized cost (negotiated vehicle price, $)
• \( RV \) — Residual value (estimated value at lease end, $)
• \( T \) — Lease term (months)
• \( MF \) — Money factor (lease interest rate as decimal)

Explanation: The depreciation covers the vehicle's value loss during the lease, while the finance charge is essentially the interest on the leased amount.

3. Importance of Lease Calculation

Details: Understanding lease payments helps consumers compare lease offers, negotiate better terms, and budget accurately for vehicle expenses.

4. Using the Calculator

Tips: Enter all values as positive numbers. Money factor is typically provided by the dealer (divide APR by 2400 to convert to money factor).

5. Frequently Asked Questions (FAQ)

Q1: What's a good money factor?
A: Rates vary, but generally below 0.0020 (equivalent to ~4.8% APR) is considered good.

Q2: How is residual value determined?
A: The leasing company sets RV based on vehicle make/model, term, and mileage allowance.

Q3: What's included in capitalized cost?
A: Negotiated vehicle price plus any fees/options you choose to finance, minus down payment/trade-in.

Q4: Are there other lease fees?
A: Yes, leases typically have acquisition fees, disposition fees, and possibly security deposits.

Q5: How can I lower my monthly payment?
A: Negotiate a lower CC, choose a longer term, find a higher RV vehicle, or secure a lower MF.