1. What is Car Lease Amortization?

Car lease amortization refers to the process of spreading out the cost of a leased vehicle over the lease term. It includes both the depreciation of the vehicle and the interest charges over the lease period.

2. How Does the Calculator Work?

The calculator uses the car lease amortization formula:

Where:

• \( Amort \) — Total amortization amount ($)
• \( Dep \) — Monthly depreciation amount ($)
• \( month \) — Number of months in the lease term
• \( cumulative\ interest \) — Total interest over the lease term ($)

Explanation: The formula calculates the total lease cost by combining the total depreciation (monthly depreciation × number of months) with the cumulative interest charges.

3. Importance of Amortization Calculation

Details: Understanding lease amortization helps consumers compare lease offers, budget for vehicle expenses, and make informed decisions about leasing versus buying.

4. Using the Calculator

Tips: Enter the monthly depreciation amount, lease term in months, and total interest charges. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's included in monthly depreciation?
A: The monthly depreciation is the difference between the vehicle's capitalized cost and its residual value, divided by the lease term.

Q2: How is cumulative interest calculated?
A: It's the sum of all interest payments over the lease term, often calculated using the money factor provided by the leasing company.

Q3: Why is amortization important in leasing?
A: It shows the true cost of leasing beyond just the monthly payment, helping you understand what you're paying for the use of the vehicle.

Q4: Does this include taxes and fees?
A: No, this calculation focuses on depreciation and interest. Taxes, acquisition fees, and other charges would be additional.

Q5: How does this compare to loan amortization?
A: Lease amortization is simpler as it doesn't involve principal reduction - you're only paying for depreciation and interest during the lease term.