Lease Calculator With Money Factor

Lease Payment Formula:

\[ Pmt = (Cap\ Cost - Residual) / Term + (Cap\ Cost + Residual) \times Money\ Factor \]

Cap Cost:

Residual:

Term:

months

Money Factor:

decimal

Monthly Payment:

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1. What is the Lease Payment Formula?

The lease payment formula calculates monthly payments for vehicle or equipment leases. It considers the capitalized cost, residual value, lease term, and money factor to determine an accurate monthly payment amount.

2. How Does the Calculator Work?

The calculator uses the lease payment formula:

\[ Pmt = (Cap\ Cost - Residual) / Term + (Cap\ Cost + Residual) \times Money\ Factor \]

Where:

\( Cap\ Cost \) — Capitalized cost or negotiated price of the vehicle
\( Residual \) — Estimated value of the vehicle at the end of the lease
\( Term \) — Length of the lease in months
\( Money\ Factor \) — Financing rate expressed as a decimal

Explanation: The formula calculates the monthly depreciation cost plus the monthly finance charge to determine the total monthly payment.

3. Importance of Lease Calculation

Details: Accurate lease calculation helps consumers understand the true cost of leasing, compare different lease offers, and budget appropriately for monthly payments.

4. Using the Calculator

Tips: Enter the capitalized cost and residual value in dollars, term in months, and money factor as a decimal. All values must be valid positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the money factor?
A: The money factor is the lease equivalent of an interest rate, expressed as a decimal. To convert to an approximate APR, multiply by 2400.

Q2: How is residual value determined?
A: Residual value is typically set by the leasing company based on the vehicle's expected depreciation over the lease term.

Q3: What fees are not included in this calculation?
A: This calculation doesn't include taxes, acquisition fees, disposition fees, or other potential lease-related charges.

Q4: Can I negotiate the money factor?
A: Money factors are sometimes negotiable, though many leasing companies have set rates based on creditworthiness.

Q5: How does lease calculation differ from loan calculation?
A: Lease payments are based on the vehicle's depreciation during the lease term plus financing costs, while loan payments repay the entire vehicle cost plus interest.