1. What is the Negative Equity Car Lease Calculator?

The Negative Equity Car Lease Calculator helps estimate your monthly lease payment when rolling negative equity from a previous vehicle into a new lease. It accounts for both the depreciation and finance charges in your lease agreement.

2. How Does the Calculator Work?

The calculator uses the lease payment formula:

Where:

• \( cap\_cost \) — Capitalized cost of the vehicle (USD)
• \( negative\_equity \) — Amount owed on previous vehicle (USD)
• \( residual \) — Residual value of the vehicle (USD)
• \( term \) — Lease term in months
• \( money\_factor \) — Lease money factor (interest rate divided by 2400)

Explanation: The first part calculates the monthly depreciation charge, while the second part calculates the monthly finance charge.

3. Importance of Negative Equity Calculation

Details: Calculating lease payments with negative equity is crucial for understanding the true cost of rolling over debt into a new lease. It helps consumers make informed financial decisions about their vehicle leasing options.

4. Using the Calculator

Tips: Enter all values in USD. The money factor can typically be obtained from the leasing company (divide the APR by 2400 to convert to money factor). Typical lease terms range from 24-60 months.

5. Frequently Asked Questions (FAQ)

Q1: What exactly is negative equity in a car lease?
A: Negative equity occurs when you owe more on your current vehicle than it's worth, and you want to roll that difference into a new lease.

Q2: Is it a good idea to roll negative equity into a lease?
A: Generally not recommended as it increases your monthly payments and may exceed leasing company limits (typically 10-15% of MSRP).

Q3: How does negative equity affect my lease payment?
A: It increases both the depreciation and finance portions of your payment, typically adding significantly to your monthly cost.

Q4: What's a typical money factor range?
A: Money factors typically range from 0.0010 (2.4% APR) to 0.0035 (8.4% APR) for prime borrowers.

Q5: Are there alternatives to rolling negative equity into a lease?
A: Yes, you could pay the difference out of pocket, keep your current vehicle longer, or negotiate a higher trade-in value.