1. What is Lease To Own?

Lease to own is a vehicle financing option in South Africa where you make monthly payments with the option to purchase the vehicle at the end of the lease term. It combines elements of both leasing and financing.

2. How Does the Calculator Work?

The calculator uses the lease to own formulas:

Where:

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

Explanation: The depreciation represents the value the car loses during the lease term, while the finance fee is essentially the interest charged on the lease.

3. Importance of Lease Calculations

Details: Understanding these calculations helps you negotiate better lease terms, compare different offers, and budget accurately for your vehicle expenses.

4. Using the Calculator

Tips: Enter all values in South African Rand (R). The money factor is typically provided by the leasing company (divide the interest rate by 2400 to get MF).

5. Frequently Asked Questions (FAQ)

Q1: What's a good money factor in South Africa?
A: Money factors typically range from 0.001 to 0.003 (equivalent to 2.4%-7.2% APR). Lower is better.

Q2: How is residual value determined?
A: The leasing company estimates the car's value at lease end based on make, model, term, and mileage.

Q3: Can I negotiate the capitalized cost?
A: Yes, this is the purchase price of the vehicle and can often be negotiated downward.

Q4: What additional costs should I consider?
A: Remember to factor in insurance, maintenance, and potential excess mileage charges.

Q5: Is lease to own better than traditional financing?
A: It depends on your needs. Lease to own often has lower monthly payments but may cost more long-term.