1. What is the Auto Lease Payment Formula?

The auto lease payment formula calculates your monthly payment by combining the depreciation charge and finance charge. Negative equity is included in the capitalized cost.

2. How Does the Calculator Work?

The calculator uses the lease payment formula:

Where:

• \( cap\_cost \) — Total financed amount including negative equity (USD)
• \( residual \) — Vehicle's residual value at lease end (USD)
• \( term \) — Lease duration in months
• \( money\_factor \) — Lease interest rate expressed as a decimal

Explanation: The first part calculates monthly depreciation, the second part calculates the finance charge. Negative equity increases the capitalized cost.

3. Importance of Negative Equity in Leasing

Details: Negative equity from a previous vehicle loan increases your capitalized cost, resulting in higher monthly payments. This calculator helps you understand that impact before leasing.

4. Using the Calculator

Tips: Enter all values as positive numbers. For money factor, convert APR by dividing by 2400 (e.g., 2.4% APR = 0.001 money factor). Include negative equity in capitalized cost.

5. Frequently Asked Questions (FAQ)

Q1: How is negative equity included in the calculation?
A: Negative equity is rolled into the capitalized cost, increasing both the depreciation and finance portions of the payment.

Q2: What's a typical money factor?
A: Money factors typically range from 0.001 to 0.004 (equivalent to 2.4% to 9.6% APR). Credit scores affect this rate.

Q3: How does residual value affect payments?
A: Higher residual values lower payments (since you're paying for less depreciation) but may require higher down payments.

Q4: Should I lease with negative equity?
A: Generally not recommended as it increases your monthly costs significantly. Consider paying off negative equity first.

Q5: Are taxes included in this calculation?
A: No, this calculates base payment before taxes and fees. Actual payment will be higher.