1. What is a Lease Payment Calculation?

The lease payment calculation determines your monthly payment when leasing a vehicle. It accounts for the vehicle's cost, its residual value at lease end, the lease term, and the money factor (converted to monthly interest).

2. How Does the Calculator Work?

The calculator uses the lease payment formula:

Where:

• \( Cap\ Cost \) — Capitalized cost (price of the vehicle)
• \( Residual \) — Estimated value at lease end
• \( Term \) — Lease duration in months
• \( Interest \) — Monthly interest amount

Explanation: The formula calculates the monthly depreciation amount plus the monthly interest charge.

3. Importance of Lease Calculations

Details: Understanding lease payments helps you budget effectively and compare different lease offers to find the best deal.

4. Using the Calculator

Tips: Enter all values in dollars. Cap cost should be the negotiated price of the vehicle. Residual is typically provided by the leasing company. Term is usually 24-48 months.

5. Frequently Asked Questions (FAQ)

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 sets the residual based on the vehicle's expected depreciation over the lease term.

Q3: Can I negotiate the money factor?
A: Yes, the money factor (which determines interest) is often negotiable, though some manufacturers set fixed rates.

Q4: What's a good lease payment?
A: A good rule of thumb is that monthly payments should be 1-1.5% of the vehicle's MSRP for a 36-month lease.

Q5: Are there other fees not included here?
A: Yes, leases typically include acquisition fees, disposition fees, and possibly security deposits not reflected in the monthly payment.