1. What is a Car Lease Payment?

A car lease payment consists of two main components: the depreciation charge (the vehicle's value you use during the lease) and the finance charge (interest on the money used during the lease).

2. How Does the Calculator Work?

The calculator uses the standard lease payment formula:

Where:

• \( Cap \) — Capitalized cost (price of the vehicle)
• \( Residual \) — Residual value (estimated value at lease end)
• \( Term \) — Lease term in months
• \( MF \) — Money factor (lease interest rate)

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

3. Understanding Lease Components

Details:

• Cap Cost: Negotiated price of the vehicle plus any additional fees
• Residual Value: Predicted value of the car at lease end (percentage of MSRP)
• Money Factor: Lease equivalent of interest rate (divide by 2400 to get APR)

4. Using the Calculator

Tips:

• Enter all values in USD
• Money factor is typically provided by the dealer (e.g., 0.00125)
• Residual value is often expressed as a percentage of MSRP

5. Frequently Asked Questions (FAQ)

Q1: What's a good money factor?
A: Rates vary, but below 0.0020 (equivalent to ~4.8% APR) is generally good.

Q2: How is residual value determined?
A: The leasing company estimates based on make/model, term, and mileage allowance.

Q3: Can I negotiate the money factor?
A: Sometimes, especially if you have excellent credit or manufacturer subvented rates.

Q4: What's included in capitalized cost?
A: Vehicle price plus fees/taxes minus any down payment or trade-in value.

Q5: How does lease term affect payments?
A: Longer terms typically mean lower monthly payments but higher total cost.