1. What is a Lease Payment Calculation?

The lease payment calculation determines your monthly payment when leasing a vehicle, accounting for capitalized cost, residual value, lease term, and financing charges. This version specifically handles negative equity from a trade-in.

2. How Does the Calculator Work?

The calculator uses the standard lease payment formula:

Where:

• \( CapCost \) — Capitalized cost (vehicle price + fees + negative equity)
• \( Residual \) — Estimated residual value at lease end
• \( Term \) — Lease duration in months
• \( MoneyFactor \) — Lease interest rate (divide APR by 2400 to get money factor)

Explanation: The first part calculates depreciation, the second part calculates financing charges. Negative equity is added to the capitalized cost.

3. Importance of Negative Equity Calculation

Details: Negative equity occurs when you owe more on your trade-in than its current value. This amount gets rolled into your new lease, increasing your monthly payments.

4. Using the Calculator

Tips: Enter all required values in USD. Money factor is typically provided by the dealer (e.g., 0.00125 equals 3% APR). Negative equity should be entered as a positive number.

5. Frequently Asked Questions (FAQ)

Q1: How does negative equity affect my lease?
A: Negative equity increases your capitalized cost, which raises both the depreciation and finance portions of your payment.

Q2: What's a good money factor?
A: Rates vary, but generally below 0.002 (equivalent to 4.8% APR) is considered good.

Q3: Should I pay off negative equity separately?
A: If possible, paying it off upfront avoids financing it and paying interest on that amount.

Q4: How is residual value determined?
A: The leasing company sets it based on the vehicle's expected depreciation over the lease term.

Q5: Can I negotiate the money factor?
A: Some dealers may adjust it, especially if you have excellent credit or manufacturer subvented rates are available.