1. What is the Lease Extension Calculator?

The Lease Extension Calculator helps determine the new monthly payment when extending a lease agreement. It calculates the adjusted payment based on the remaining value of the asset, new residual value, extended term, and any additional interest.

2. How Does the Calculator Work?

The calculator uses the lease extension formula:

Where:

• \( \text{Remaining Value} \) — Current value of the leased asset (USD)
• \( \text{New Residual} \) — Projected value at end of extended term (USD)
• \( \text{New Term} \) — Duration of extension in months
• \( \text{Interest} \) — Additional monthly interest (USD)

Explanation: The formula spreads the remaining depreciable value (remaining value minus new residual) over the new term and adds any additional interest charges.

3. Importance of Lease Extension Calculation

Details: Calculating the new payment accurately is crucial for financial planning, budgeting, and comparing lease extension offers against alternative options.

4. Using the Calculator

Tips: Enter all values in USD. The remaining value should be the current market value of the asset. The new residual is your estimated value at the end of the extended term.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between remaining value and new residual?
A: Remaining value is the current worth of the asset, while new residual is its projected value at the end of the extended lease term.

Q2: How do I determine the interest amount?
A: The interest is typically provided by the leasing company based on current market rates and your creditworthiness.

Q3: Can this calculator be used for any type of lease?
A: It works best for standard capital leases or finance leases where depreciation is a key factor.

Q4: What if my new residual is higher than remaining value?
A: This would result in a negative numerator, which might indicate an unrealistic residual value or that the asset has appreciated.

Q5: Should I include taxes and fees in this calculation?
A: This calculator provides the base payment. Additional costs like taxes, fees, or insurance should be considered separately.