Lease Rate Calculator Calculate Lease Payment

Lease Payment Formula:

\[ Payment = \frac{(Cap\ Cost - Residual)}{Term} + (Cap\ Cost + Residual) \times Money\ Factor \]

Cap Cost ($):

Residual ($):

Term (months):

months

Money Factor (unitless):

unitless

Payment ($/month):

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1. What is Lease Payment Calculation?

Lease payment calculation determines the monthly cost of leasing a vehicle or equipment. It considers the capitalized cost, residual value, lease term, and money factor to calculate the periodic payment amount.

2. How Does the Calculator Work?

The calculator uses the lease payment formula:

\[ Payment = \frac{(Cap\ Cost - Residual)}{Term} + (Cap\ Cost + Residual) \times Money\ Factor \]

Where:

$ Cap\ Cost $ — Capitalized cost or negotiated price of the vehicle ($)
$ Residual $ — Estimated value of the vehicle at lease end ($)
$ Term $ — Lease duration in months
$ Money\ Factor $ — Lease financing rate (unitless)

Explanation: The formula calculates the monthly payment by dividing depreciation over the lease term and adding the finance charge based on the average of cap cost and residual value.

3. Importance of Lease Payment Calculation

Details: Accurate lease payment calculation helps consumers compare lease offers, budget effectively, and understand the true cost of leasing versus buying. It's essential for financial planning and avoiding unexpected expenses.

4. Using the Calculator

Tips: Enter capitalized cost and residual value in dollars, lease term in months, and money factor as a decimal. All values must be positive numbers with cap cost greater than residual value for accurate results.

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between cap cost and MSRP?
A: MSRP is the manufacturer's suggested retail price, while cap cost is the actual negotiated price you pay for the vehicle, which may be lower than MSRP.

Q2: How is money factor different from interest rate?
A: Money factor is the lease equivalent of an interest rate. To convert money factor to approximate APR, multiply by 2400 (e.g., 0.0025 money factor ≈ 6% APR).

Q3: What affects the residual value?
A: Residual value depends on the vehicle's make, model, expected mileage, lease term, and projected depreciation based on historical data.

Q4: Are there additional costs not included in this calculation?
A: Yes, this calculation doesn't include taxes, fees, acquisition costs, disposition fees, or any additional services or insurance required by the lessor.

Q5: Can I negotiate the money factor?
A: Money factors are often set by the leasing company, but dealers may mark them up. It's worth asking if the money factor is the "buy rate" or includes dealer markup.