Lease Payment Formula:
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A car lease payment is the monthly amount you pay to drive a vehicle you don't own. It's calculated based on the vehicle's depreciation during the lease term plus financing charges.
The calculator uses the lease payment formula:
Where:
Explanation: The formula calculates the monthly depreciation amount plus the finance charge to determine your total monthly payment.
Details: Understanding how lease payments are calculated helps you negotiate better terms and compare lease offers effectively.
Tips: Enter all values in dollars. Cap cost should be the negotiated price after any down payment or trade-in. Residual value is typically provided by the leasing company.
Q1: What's included in the cap cost?
A: Cap cost includes the vehicle price plus any fees or add-ons, minus any down payment or trade-in value.
Q2: How is residual value determined?
A: The leasing company estimates the vehicle's future value based on make, model, term, and mileage allowance.
Q3: Can I negotiate the lease terms?
A: Yes, you can negotiate the cap cost, money factor (interest), and sometimes the residual value.
Q4: What's a good lease payment?
A: A good rule of thumb is that the monthly payment should be less than 1% of the vehicle's MSRP.
Q5: Are there other fees involved in leasing?
A: Yes, leases typically include acquisition fees, disposition fees, and possibly security deposits not reflected in this calculation.