1. What is Lease Calculation Formula?

The lease calculation formula determines the monthly payment for a vehicle lease. It consists of two main components: depreciation (the vehicle's value loss during the lease) and finance fee (the cost of borrowing).

2. How Does the Calculator Work?

The calculator uses the lease calculation formulas:

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 is the vehicle's value loss spread over the lease term. The finance fee is essentially the interest charge calculated using the money factor.

3. Importance of Lease Calculation

Details: Understanding lease calculations helps consumers evaluate lease offers, compare different deals, and negotiate better terms with dealers.

4. Using the Calculator

Tips: Enter all values in dollars except term (months) and money factor (as a decimal). Money factor can be converted from APR by dividing by 2400.

5. Frequently Asked Questions (FAQ)

Q1: How is money factor determined?
A: Money factor is set by the leasing company based on credit score and market conditions. Lower scores mean higher money factors.

Q2: What's a good money factor?
A: As of 2023, good credit scores typically get money factors around 0.0010-0.0020 (equivalent to 2.4%-4.8% APR).

Q3: How can I lower my monthly payment?
A: Negotiate a lower capitalized cost, higher residual value, longer term, or better money factor through improved credit.

Q4: What fees aren't included in this calculation?
A: This doesn't include taxes, registration, acquisition fees, or other dealer charges that may be added to the payment.

Q5: Is leasing better than buying?
A: It depends on individual circumstances. Leasing offers lower payments and new cars more often, while buying builds equity.