1. What is Lease to Finance Payment?

The lease to finance payment calculation determines the monthly payment amount when converting a lease to a financing arrangement. It considers the residual value, interest rate, and term length.

2. How Does the Calculator Work?

The calculator uses the lease payment formula:

Where:

• \( MP \) — Monthly payment ($)
• \( RV \) — Residual value ($)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Term length (months)

Explanation: The formula calculates the fixed monthly payment needed to pay off the residual value over the term at the given interest rate.

3. Importance of Lease Payment Calculation

Details: Accurate payment calculation helps consumers understand their financial commitment when converting a lease to financing and compare different financing options.

4. Using the Calculator

Tips: Enter the residual value (buyout amount), annual interest rate (APR), and term length in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is residual value in lease financing?
A: The predetermined value of the vehicle at lease end, which becomes the purchase price if you decide to buy it.

Q2: How is the monthly interest rate calculated?
A: The annual rate is divided by 12 (months) and converted to decimal form (e.g., 6% becomes 0.005 monthly).

Q3: Are there other fees not included in this calculation?
A: Yes, this calculates only the principal and interest. Taxes, fees, and insurance would be additional.

Q4: Why would someone convert a lease to financing?
A: Common reasons include wanting to keep the vehicle, positive equity in the car, or avoiding lease-end charges.

Q5: How does this compare to a traditional auto loan?
A: The math is the same, but lease buyouts may have different interest rates and terms than new car loans.