1. What is the Monthly Lease Rate?

The monthly lease rate is the amount you pay each month for a leased vehicle or equipment. It consists of two main components: depreciation and finance fee.

2. How Does the Calculator Work?

The calculator uses the lease payment formula:

Where:

• \( MP \) — Monthly payment ($)
• \( Dep \) — Depreciation ($/month)
• \( Fin \) — Finance fee ($/month)
• \( CC \) — Capitalized cost ($)
• \( RV \) — Residual value ($)
• \( T \) — Term (months)
• \( MF \) — Money factor (decimal)

Explanation: The depreciation represents the vehicle's value loss over the lease term, while the finance fee is essentially the interest charge.

3. Importance of Lease Rate Calculation

Details: Understanding how lease payments are calculated helps you negotiate better terms, compare lease offers, and make informed financial decisions about leasing vs. buying.

4. Using the Calculator

Tips: Enter the capitalized cost (negotiated price), residual value (estimated value at lease end), lease term in months, and money factor (provided by dealer). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is money factor different from interest rate?
A: Money factor is essentially the interest rate divided by 2400. To convert money factor to approximate APR, multiply by 2400.

Q2: What's a good money factor?
A: Money factors vary but generally below 0.0020 is considered good for prime credit borrowers.

Q3: How is residual value determined?
A: The leasing company sets residual values based on projected future value, typically as a percentage of MSRP.

Q4: Can I negotiate the capitalized cost?
A: Yes, you can negotiate the capitalized cost just like you would negotiate the purchase price of a vehicle.

Q5: Are there other fees not included in this calculation?
A: Yes, this calculates the base payment only. Additional fees may include acquisition fee, disposition fee, taxes, and registration.