1. What is Lease To Own Vehicle Calculation?

The Lease To Own Vehicle calculation helps determine the monthly payment structure when leasing a vehicle with the option to purchase. It breaks down the payment into depreciation and finance components.

2. How Does the Calculator Work?

The calculator uses these equations:

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 represents the vehicle's value loss over the lease term, while the finance fee is the cost of borrowing.

3. Importance of Lease Calculation

Details: Understanding these components helps compare lease offers, negotiate better terms, and make informed financial decisions about vehicle leasing.

4. Using the Calculator

Tips: Enter all required values in the specified units. Capitalized cost is the negotiated price, residual value is the estimated value at lease end, term is lease duration, and money factor is the lease's interest rate equivalent.

5. Frequently Asked Questions (FAQ)

Q1: How is money factor different from APR?
A: Money factor is a decimal version of interest rate (e.g., 0.0025 = ~6% APR). Multiply by 2400 to convert to approximate APR.

Q2: What's a good money factor?
A: Rates vary, but generally below 0.0025 (6% APR) is considered good for prime credit.

Q3: How is residual value determined?
A: The leasing company sets it based on vehicle make/model, term length, and projected mileage.

Q4: Can I negotiate the capitalized cost?
A: Yes, this is the vehicle's negotiated price and is often negotiable like a purchase price.

Q5: What's included in capitalized cost?
A: Vehicle price plus any fees or add-ons you choose to finance in the lease.