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 term) and finance charges (the cost of borrowing money to lease the vehicle). 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 ($/month)
• \( Fin \) — Finance fee ($/month)
• \( MP \) — Monthly payment ($)
• \( CC \) — Capitalized cost ($)
• \( RV \) — Residual value ($)
• \( T \) — Term (months)
• \( MF \) — Money factor (decimal)

Explanation: The depreciation represents the portion of the vehicle's value you're using during the lease, while the finance charge is essentially the interest on the lease.

3. Importance Of Lease Calculation

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

4. Using The Calculator

Tips: Enter all values in the correct units (dollars for CC/RV, months for term, decimal for money factor). Money factor can be converted from APR by dividing by 2400.

5. Frequently Asked Questions (FAQ)

Q1: What's a good money factor?
A: Money factors typically range from 0.0010 to 0.0040 (equivalent to 2.4% to 9.6% APR). Lower is better.

Q2: How is residual value determined?
A: The leasing company sets RV based on the vehicle's expected value at lease end, expressed as a percentage of MSRP.

Q3: Can I negotiate the capitalized cost?
A: Yes, CC is negotiable just like a purchase price. It can be reduced through dealer discounts, rebates, or trade-in credits.

Q4: What's not included in this calculation?
A: This doesn't include taxes, fees, or insurance which are typically added to lease payments.

Q5: How does lease term affect payments?
A: Longer terms typically have lower monthly payments but higher total costs due to more finance charges.