1. What is the Lease Payment Formula?

The lease payment formula calculates your monthly payment when leasing a vehicle. It accounts for the vehicle's depreciation and financing charges over the lease term.

2. How Does the Calculator Work?

The calculator uses the lease payment formula:

Where:

• \( CapCost \) — Total capitalized cost (including fees and negative equity)
• \( Residual \) — Vehicle's 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 monthly depreciation, the second part calculates monthly finance charge.

3. Importance of Accurate Lease Calculation

Details: Understanding your lease payment breakdown helps negotiate better terms and compare lease offers effectively.

4. Using the Calculator

Tips: Enter all values in USD. Money factor is typically provided by the dealer (e.g., 0.00125 = ~3% APR). Cap cost should include all fees and add-ons.

5. Frequently Asked Questions (FAQ)

Q1: What's included in capitalized cost?
A: Vehicle price, acquisition fee, documentation fee, taxes, and any negative equity from trade-in.

Q2: How is residual value determined?
A: The leasing company sets it based on vehicle make/model, term length, and mileage allowance.

Q3: What's a good money factor?
A: Varies by credit score. Excellent credit might get 0.0010 (2.4% APR), while subprime could be 0.0035+ (8.4% APR).

Q4: Can I negotiate lease terms?
A: Yes! Negotiate cap cost (vehicle price), money factor (credit dependent), and sometimes residual.

Q5: Why is lease payment lower than loan payment?
A: You're only paying for the vehicle's depreciation during lease term, not full value.