1. What is Lease Payment Calculation?

The lease payment calculation determines your monthly payment when leasing a vehicle or equipment. It accounts for the vehicle's depreciation during the lease term plus any finance charges.

2. How Does the Calculator Work?

The calculator uses the lease payment formula:

Where:

• \( \text{Cap Cost} \) — Negotiated price of the vehicle
• \( \text{Residual} \) — Vehicle's value at lease end
• \( \text{Term} \) — Lease duration in months
• \( \text{Finance Charge} \) — Monthly money factor/interest

Explanation: The formula calculates the monthly depreciation amount (cap cost minus residual divided by term) and adds the monthly finance charge.

3. Importance of Lease Calculation

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

4. Using the Calculator

Tips: Enter all values in dollars. Cap cost should include any fees rolled into the lease. Residual is typically provided by the leasing company.

5. Frequently Asked Questions (FAQ)

Q1: What's included in capitalized cost?
A: Cap cost includes the negotiated vehicle price plus any additional fees, taxes, or optional equipment you choose to finance.

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: What affects the finance charge?
A: The money factor (lease equivalent of interest rate) and your credit score primarily determine the finance charge.

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

Q5: Can I negotiate lease terms?
A: Yes, you can negotiate the capitalized cost, which directly affects your monthly payment.