1. What is the UK Lease Payment Formula?

The UK lease payment formula calculates monthly payments for vehicle leases by considering depreciation, finance charges, and lease term. It's commonly used for personal contract hire (PCH) agreements.

2. How Does the Calculator Work?

The calculator uses the lease payment formula:

Where:

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

Explanation: The formula splits the payment into depreciation (vehicle value loss) and finance charges (cost of borrowing).

3. Importance of Lease Calculation

Details: Understanding lease payments helps compare deals, budget effectively, and negotiate better terms. It shows the cost components clearly.

4. Using the Calculator

Tips: Enter all values in pounds sterling. Money factor is typically provided by the leasing company (convert APR to MF by dividing by 2400).

5. Frequently Asked Questions (FAQ)

Q1: What's a good money factor in the UK?
A: Typically 0.0015-0.0035 (equivalent to 3.6%-8.4% APR). Lower is better.

Q2: How is residual value determined?
A: Leasing companies estimate future value based on make/model, mileage, and market trends.

Q3: What's included in capitalized cost?
A: Vehicle price minus deposit plus any additional fees rolled into the lease.

Q4: Are there other lease fees?
A: Yes, initial fees, excess mileage charges, and end-of-lease fees may apply.

Q5: Can I negotiate lease terms?
A: Yes, especially capitalized cost and money factor (indirectly via APR).