function calculateLease() {
var price = parseFloat(document.getElementById('carPrice').value);
var down = parseFloat(document.getElementById('downPayment').value) || 0;
var trade = parseFloat(document.getElementById('tradeIn').value) || 0;
var term = parseFloat(document.getElementById('leaseTerm').value);
var mf = parseFloat(document.getElementById('moneyFactor').value);
var resPct = parseFloat(document.getElementById('residualValue').value);
if (isNaN(price) || isNaN(term) || isNaN(mf) || isNaN(resPct)) {
alert("Please fill in all required fields with valid numbers.");
return;
}
var capCost = price – down – trade;
var resAmt = price * (resPct / 100);
// Depreciation Fee = (Adjusted Cap Cost – Residual Value) ÷ Term
var monthlyDepreciation = (capCost – resAmt) / term;
// Finance Fee = (Adjusted Cap Cost + Residual Value) × Money Factor
var monthlyFinance = (capCost + resAmt) * mf;
var monthlyPayment = monthlyDepreciation + monthlyFinance;
var totalLeaseCost = (monthlyPayment * term) + down + trade;
document.getElementById('monthlyResult').innerText = '$' + monthlyPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('totalCostResult').innerText = '$' + totalLeaseCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('grossCap').innerText = '$' + capCost.toLocaleString();
document.getElementById('resAmt').innerText = '$' + resAmt.toLocaleString();
document.getElementById('depCharge').innerText = '$' + monthlyDepreciation.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('finCharge').innerText = '$' + monthlyFinance.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resultsArea').style.display = 'block';
}
How Does Car Leasing Math Work?
Leasing a vehicle is often misunderstood. Unlike a standard car loan where you pay for the entire value of the vehicle plus interest, a lease essentially pays for the depreciation that occurs during the time you drive it.
The Key Components of a Lease
Gross Capitalized Cost: The agreed-upon value of the vehicle. This is negotiable, just like a purchase price.
Residual Value: This is what the leasing company predicts the car will be worth at the end of your lease. A higher residual value usually means lower monthly payments.
Money Factor: This represents the interest rate. To convert a Money Factor to a standard APR, multiply it by 2400.
Lease Term: The duration of the lease, typically 24, 36, or 48 months.
The Formula Explained
The calculation is split into two main parts: the Depreciation Fee and the Finance Fee.
Depreciation Fee: (Net Capitalized Cost – Residual Value) / Term. This covers the value the car loses while you have it.
Finance Fee: (Net Capitalized Cost + Residual Value) × Money Factor. This is the cost of borrowing the money to hold the asset.
Example Calculation
Imagine a car priced at $40,000 with a residual value of 60% ($24,000) after 36 months. If you put $2,000 down and have a money factor of 0.0015:
Leasing is ideal for drivers who want a new car every few years, prefer lower monthly payments, and drive a predictable number of miles annually. However, if you plan to keep a vehicle for 10 years or drive more than 15,000 miles per year, traditional financing usually offers better long-term value.