Compare leasing options by separating depreciation and finance charges.
Overview
Lease payments are driven by depreciation plus financing charges.
This calculator clarifies how residual value and money factor shape monthly cost.
It helps compare lease offers that look similar but cost different totals.
Mileage limits and end-of-lease terms remain crucial outside the formula.
Steps
Input negotiated vehicle cost for lease.
Use expected end-of-lease vehicle value.
Input finance factor from lease contract.
Choose total lease months.
Review base monthly lease amount.
Math
Lease Payment = (Cap Cost - Residual)/Term + (Cap Cost + Residual) × Money Factor
Lease payment equals depreciation charge plus finance charge computed from cap and residual values.
Worked cases
Compute depreciation and finance components.
Estimated monthly base payment can be benchmarked against dealer quote.
Recompute finance charge only.
Lower money factor directly reduces monthly payment.
Increase residual and recalculate depreciation component.
Higher residual usually lowers lease payment.
Why use this
Questions