1. What is Lease Calculation?

The lease calculation determines monthly payments by accounting for vehicle depreciation and financing costs. It considers the capitalized cost, residual value, lease term, and money factor.

2. How Does the Calculator Work?

The calculator uses these lease equations:

Where:

• \( Dep \) — Monthly depreciation amount ($)
• \( Fin \) — Monthly finance fee ($)
• \( MP \) — Total monthly payment ($)
• \( CC \) — Capitalized cost (vehicle price + fees - down payment)
• \( RV \) — Residual value (estimated value at lease end)
• \( T \) — Lease term in months
• \( MF \) — Money factor (interest rate expressed as decimal)

Explanation: The depreciation is the value lost during the lease term, while the finance fee is essentially the interest charge on the leased amount.

3. Importance of Lease Calculation

Details: Understanding lease calculations helps consumers evaluate lease offers, compare financing options, and negotiate better terms.

4. Using the Calculator

Tips: Enter all values in USD. Money factor is typically provided by dealers (e.g., 0.00125). Residual value is often expressed as percentage of MSRP.

5. Frequently Asked Questions (FAQ)

Q1: How is money factor related to APR?
A: Money factor × 2400 ≈ APR. For example, 0.00125 MF ≈ 3% APR.

Q2: What's a good residual value percentage?
A: Typically 50-60% of MSRP for 36-month lease, varies by make/model.

Q3: Should I put money down on a lease?
A: Generally not recommended as it doesn't reduce interest costs and is lost if vehicle is totaled.

Q4: What fees are included in capitalized cost?
A: Vehicle price + acquisition fee + documentation fees + taxes - any down payment or trade-in credit.

Q5: Can I negotiate the money factor?
A: Sometimes - dealers may mark up the buy rate from the bank. Credit unions may offer better rates.