1. What is a Car Lease Payment?

A car lease payment consists of two main components: depreciation (the value the car loses during the lease) and finance charge (the cost of borrowing the money). The payment is calculated based on the capitalized cost, residual value, lease term, and money factor.

2. How Does the Calculator Work?

The calculator uses the standard lease payment formula:

Where:

• \( Cap \) — Capitalized cost (price of the car)
• \( Residual \) — Estimated value at lease end
• \( Term \) — Lease duration in months
• \( Money\ Factor \) — Lease interest rate (decimal)

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

3. Importance of Lease Calculation

Details: Understanding lease payments helps consumers compare lease offers, budget effectively, and negotiate better terms with dealers.

4. Using the Calculator

Tips: Enter all values in USD. Money factor is typically provided by the dealer (divide APR by 2400 to convert to money factor). Residual value is often expressed as a percentage of MSRP.

5. Frequently Asked Questions (FAQ)

Q1: What's a good money factor?
A: Money factors typically range from 0.0010 (2.4% APR) to 0.0030 (7.2% APR). Lower is better.

Q2: How is residual value determined?
A: The leasing company estimates the car's value at lease end based on make, model, term, and mileage allowance.

Q3: What's included in capitalized cost?
A: Negotiated price of the car plus any fees or add-ons, minus down payment or trade-in value.

Q4: Are there other lease fees?
A: Yes, leases often have acquisition fees, disposition fees, and possibly security deposits not included in this calculation.

Q5: How can I lower my lease payment?
A: Negotiate a lower capitalized cost, higher residual value, lower money factor, or extend the lease term.