1. What is the Lease Payment Formula?

The lease payment formula calculates your monthly car lease payment by considering the vehicle's cost, residual value, lease term, and money factor (interest rate). It breaks down into depreciation and finance components.

2. How Does the Calculator Work?

The calculator uses the lease payment 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 covers the vehicle's value loss during the lease, while the finance fee represents the cost of borrowing.

3. Importance of Lease Calculation

Details: Understanding your lease payment breakdown helps negotiate better terms, compare lease offers, and budget accurately for your vehicle expenses.

4. Using the Calculator

Tips: Enter the negotiated vehicle price (capitalized cost), estimated residual value, lease term in months, and money factor (divide APR by 2400 to convert to money factor).

5. Frequently Asked Questions (FAQ)

Q1: What is capitalized cost?
A: This is the negotiated price of the vehicle plus any fees or add-ons you're financing in the lease.

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

Q3: What's a good money factor?
A: Money factors typically range from 0.0010 (2.4% APR) to 0.0030 (7.2% APR). Lower is better.

Q4: Can I negotiate lease terms?
A: Yes, you can negotiate capitalized cost, money factor, and sometimes residual value.

Q5: What's not included in this calculation?
A: Taxes, registration fees, and insurance are additional costs not reflected in this base payment.