Lease Calculator

Lease Payment Formula:

\[ Dep = (CC - RV) / T \] \[ Fin = (CC + RV) \times MF \] \[ MP = Dep + Fin \]

Capitalized Cost (CC):

Residual Value (RV):

Term (T):

months

Money Factor (MF):

decimal

Depreciation (Dep):

Finance Fee (Fin):

Monthly Payment (MP):

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1. What is a Lease Calculator?

The Lease Calculator estimates monthly payments for vehicle or equipment leases by calculating depreciation and finance charges. It helps compare lease offers and understand payment components.

2. How Does the Calculator Work?

The calculator uses standard lease formulas:

\[ Dep = (CC - RV) / T \] \[ Fin = (CC + RV) \times MF \] \[ MP = Dep + Fin \]

Where:

$ Dep $ — Monthly depreciation amount ($)
$ Fin $ — Monthly finance fee ($)
$ MP $ — Total monthly payment ($)
$ CC $ — Capitalized cost (vehicle price after 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 calculation separates the payment into depreciation (amortizing the vehicle's value) and financing (cost of borrowing).

3. Importance of Lease Calculation

Details: Understanding lease components helps negotiate better terms, compare offers, and budget accurately. The money factor converts to an equivalent interest rate when multiplied by 2400.

4. Using the Calculator

Tips: Enter all values in USD. Money factor is typically provided by the dealer (e.g., 0.00125 converts to ~3% APR). Residual value is often expressed as a percentage of MSRP.

5. Frequently Asked Questions (FAQ)

Q1: How is money factor different from interest rate?
A: Money factor is the interest rate divided by 2400. Multiply MF by 2400 to get approximate APR (e.g., 0.00125 MF = 3% APR).

Q2: What's a good residual value percentage?
A: Typically 50-60% of MSRP for 36-month leases. Higher residual means lower payments but may reflect optimistic projections.

Q3: Should I focus on monthly payment or total cost?
A: Both matter. A low payment with high residual might mean a large balloon payment if you buy the vehicle at lease end.

Q4: How does down payment affect the calculation?
A: Down payment reduces capitalized cost, lowering both depreciation and finance charges.

Q5: Are taxes included in this calculation?
A: No, most states tax the monthly payment separately. Check local regulations for exact tax treatment.