Automobile Lease Calculator

Automobile Lease Payment Calculator

function calculateLeasePayment() { var vehicleSellingPrice = parseFloat(document.getElementById("vehicleSellingPrice").value); var capitalizedCostReduction = parseFloat(document.getElementById("capitalizedCostReduction").value); var residualValuePercentage = parseFloat(document.getElementById("residualValuePercentage").value); var leaseTermMonths = parseFloat(document.getElementById("leaseTermMonths").value); var moneyFactor = parseFloat(document.getElementById("moneyFactor").value); var salesTaxRate = parseFloat(document.getElementById("salesTaxRate").value); var acquisitionFee = parseFloat(document.getElementById("acquisitionFee").value); var documentationFee = parseFloat(document.getElementById("documentationFee").value); if (isNaN(vehicleSellingPrice) || isNaN(capitalizedCostReduction) || isNaN(residualValuePercentage) || isNaN(leaseTermMonths) || isNaN(moneyFactor) || isNaN(salesTaxRate) || isNaN(acquisitionFee) || isNaN(documentationFee) || vehicleSellingPrice <= 0 || leaseTermMonths <= 0 || moneyFactor < 0 || residualValuePercentage < 0) { document.getElementById("leaseResult").innerHTML = "Please enter valid positive numbers for all fields."; return; } // 1. Calculate Residual Value Amount var residualValueAmount = vehicleSellingPrice * (residualValuePercentage / 100); // 2. Calculate Gross Capitalized Cost (Selling Price + Fees) var grossCapitalizedCost = vehicleSellingPrice + acquisitionFee + documentationFee; // 3. Calculate Adjusted Capitalized Cost (Gross Cap Cost – Reductions) var adjustedCapitalizedCost = grossCapitalizedCost – capitalizedCostReduction; // Ensure adjusted capitalized cost is not less than residual value (though usually handled by lender) if (adjustedCapitalizedCost < residualValueAmount) { // This is an edge case, usually means too much reduction or very low residual. // For calculation purposes, we'll proceed but it's good to note. // Some lenders might cap capitalized cost reduction. } // 4. Calculate Depreciation Portion var depreciationPortion = (adjustedCapitalizedCost – residualValueAmount) / leaseTermMonths; // 5. Calculate Rent Charge (Finance Charge) var rentCharge = (adjustedCapitalizedCost + residualValueAmount) * moneyFactor; // 6. Calculate Base Monthly Payment var baseMonthlyPayment = depreciationPortion + rentCharge; // 7. Calculate Sales Tax on Payment var taxOnPayment = baseMonthlyPayment * (salesTaxRate / 100); // 8. Calculate Total Monthly Payment var totalMonthlyPayment = baseMonthlyPayment + taxOnPayment; document.getElementById("leaseResult").innerHTML = "Your Estimated Monthly Lease Payment: $" + totalMonthlyPayment.toFixed(2) + ""; }

Understanding Your Automobile Lease Payment

Leasing a car can be an attractive option for many drivers, offering lower monthly payments compared to purchasing, the ability to drive a new car more frequently, and often covering maintenance under warranty. However, understanding how your monthly lease payment is calculated is crucial to making an informed decision. This calculator helps you estimate your monthly obligation based on key leasing factors.

Key Components of an Automobile Lease

Unlike a car loan where you pay to own the vehicle, a lease means you're essentially paying for the depreciation of the car during the lease term, plus a finance charge (rent charge) and taxes. Here's a breakdown of the terms used in the calculator:

• Vehicle Selling Price: This is the agreed-upon price of the car, similar to if you were buying it. It's the starting point for calculating the lease.
• Capitalized Cost Reduction: This is any upfront payment you make to reduce the total amount being financed in the lease. It can include cash down, a trade-in value, or rebates. A higher capitalized cost reduction typically leads to lower monthly payments.
• Residual Value (% of Selling Price): This is the estimated value of the vehicle at the end of the lease term, expressed as a percentage of the original selling price. A higher residual value means you're depreciating less of the car's value, resulting in lower monthly payments.
• Lease Term (Months): The duration of your lease agreement, typically 24, 36, or 48 months.
• Money Factor: This is the lease equivalent of an interest rate. It's a very small decimal number (e.g., 0.00150). To convert it to an approximate annual percentage rate (APR), multiply it by 2400 (0.00150 * 2400 = 3.6% APR).
• Sales Tax Rate (%): The sales tax applied to your monthly lease payment, which varies by state and local regulations.
• Acquisition Fee ($): A fee charged by the leasing company for initiating the lease. This can sometimes be rolled into the capitalized cost.
• Documentation Fee ($): A fee charged by the dealership for processing paperwork. This can also be rolled into the capitalized cost.

How Your Monthly Lease Payment is Calculated

The monthly lease payment is primarily composed of two parts: the depreciation charge and the rent charge, plus applicable sales tax. Here's the general formula:

1. Calculate Residual Value Amount: Vehicle Selling Price × (Residual Value Percentage / 100)
2. Calculate Gross Capitalized Cost: Vehicle Selling Price + Acquisition Fee + Documentation Fee
3. Calculate Adjusted Capitalized Cost: Gross Capitalized Cost – Capitalized Cost Reduction
4. Calculate Depreciation Portion: (Adjusted Capitalized Cost – Residual Value Amount) / Lease Term (Months)
5. Calculate Rent Charge: (Adjusted Capitalized Cost + Residual Value Amount) × Money Factor
6. Calculate Base Monthly Payment: Depreciation Portion + Rent Charge
7. Calculate Sales Tax on Payment: Base Monthly Payment × (Sales Tax Rate / 100)
8. Total Monthly Payment: Base Monthly Payment + Sales Tax on Payment

Example Calculation

Let's use the default values in the calculator to illustrate:

• Vehicle Selling Price: $35,000
• Capitalized Cost Reduction: $2,000
• Residual Value Percentage: 55%
• Lease Term: 36 months
• Money Factor: 0.00150
• Sales Tax Rate: 7%
• Acquisition Fee: $595
• Documentation Fee: $150

Step-by-step:

1. Residual Value Amount: $35,000 × 0.55 = $19,250
2. Gross Capitalized Cost: $35,000 + $595 + $150 = $35,745
3. Adjusted Capitalized Cost: $35,745 – $2,000 = $33,745
4. Depreciation Portion: ($33,745 – $19,250) / 36 = $14,495 / 36 = $402.64
5. Rent Charge: ($33,745 + $19,250) × 0.00150 = $52,995 × 0.00150 = $79.49
6. Base Monthly Payment: $402.64 + $79.49 = $482.13
7. Sales Tax: $482.13 × (7 / 100) = $33.75
8. Total Monthly Payment: $482.13 + $33.75 = $515.88

By understanding these factors and using the calculator, you can better negotiate your lease terms and ensure the monthly payment fits your budget.