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Lease With Trade In Formula:
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The lease with trade in calculation determines the capitalized cost (CC) of a vehicle lease by subtracting any discounts and trade-in value from the manufacturer's suggested retail price (MSRP). This adjusted capitalized cost is used to calculate monthly lease payments.
The calculator uses the lease with trade in formula:
Where:
Explanation: The formula calculates the net capitalized cost by reducing the MSRP by any applicable discounts and the value of your trade-in vehicle.
Details: The capitalized cost is crucial in lease agreements as it directly affects your monthly payments. A lower capitalized cost means lower monthly payments over the lease term.
Tips: Enter the vehicle's MSRP, any dealer discounts, and your trade-in value (if applicable). All values must be positive numbers.
Q1: What exactly is capitalized cost in a lease?
A: Capitalized cost is the negotiated price of the vehicle that your lease payments are based on, after all discounts and trade-ins are applied.
Q2: Does a higher trade-in value always mean better lease terms?
A: Generally yes, as it reduces your capitalized cost, but also consider if you might get more value selling your car privately.
Q3: Should I focus only on capitalized cost when leasing?
A: No, also consider money factor (interest rate), residual value, lease term, and mileage limits for a complete picture.
Q4: Can I negotiate the capitalized cost?
A: Yes, you can negotiate the selling price just like when buying a car, which becomes your capitalized cost after trade-in.
Q5: Are there fees not included in this calculation?
A: Yes, this doesn't include acquisition fees, documentation fees, or taxes which may be added to the capitalized cost.