1. What is Lease Payment Calculation?

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

2. How Does the Calculator Work?

The calculator uses these 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 component covers the vehicle's value loss, while the finance charge covers the leasing company's cost of funds.

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 is capitalized cost?
A: This is the negotiated price of the vehicle plus any additional fees or items rolled into the lease.

Q2: How is residual value determined?
A: The leasing company sets the residual value based on the vehicle's expected depreciation over the lease term.

Q3: What is a good money factor?
A: Lower is better. Typical money factors range from 0.0010 to 0.0040 (equivalent to 2.4% to 9.6% APR).

Q4: Are taxes included in this calculation?
A: No, this calculates the base payment before taxes and fees which vary by location.

Q5: Can I negotiate the money factor?
A: Some dealers may adjust it, but it's often set by the leasing company based on creditworthiness.