1. What is Lease Interest?

The lease interest represents the finance charge you'll pay over the term of your lease. It's calculated based on the sum of the vehicle's capitalized cost and residual value, multiplied by the money factor and lease term.

2. How Does the Calculator Work?

The calculator uses the lease interest formula:

Where:

• \( CC \) — Capitalized Cost (negotiated price of the vehicle)
• \( RV \) — Residual Value (estimated value at lease end)
• \( MF \) — Money Factor (lease's interest rate in decimal form)
• \( T \) — Term (lease duration in months)

Explanation: This formula calculates the total interest paid over the entire lease term, showing the cost of financing the leased vehicle.

3. Importance of Lease Interest Calculation

Details: Understanding your lease interest helps you compare financing options, negotiate better terms, and budget for your total lease costs.

4. Using the Calculator

Tips: Enter all values as positive numbers. Money factor is typically a small decimal (e.g., 0.00125 which equals 3% APR). Term is in months (e.g., 36 for 3 years).

5. Frequently Asked Questions (FAQ)

Q1: How do I find the money factor?
A: The money factor is usually provided by the leasing company. You can convert APR to money factor by dividing by 2400.

Q2: What's a good money factor?
A: Lower is better. Rates vary but generally below 0.002 (equivalent to 4.8% APR) is considered good.

Q3: Does this include taxes and fees?
A: No, this calculates only the finance charge. Additional costs may apply to your lease.

Q4: Why add CC and RV in the formula?
A: Lease interest is calculated on the average of the vehicle's value over the lease term (CC at start, RV at end).

Q5: Can I negotiate the money factor?
A: Sometimes. Dealers may mark up the buy rate. Check with multiple lenders for comparison.