function calculateCarLease() {
var msrp = parseFloat(document.getElementById('msrp').value);
var downPayment = parseFloat(document.getElementById('downPayment').value) || 0;
var tradeIn = parseFloat(document.getElementById('tradeIn').value) || 0;
var term = parseFloat(document.getElementById('leaseTerm').value);
var apr = parseFloat(document.getElementById('apr').value);
var residualPercent = parseFloat(document.getElementById('residualPercent').value);
if (isNaN(msrp) || isNaN(term) || isNaN(apr) || isNaN(residualPercent) || term <= 0) {
alert("Please enter valid numeric values.");
return;
}
// 1. Adjusted Capitalized Cost
var adjustedCapCost = msrp – downPayment – tradeIn;
// 2. Residual Value
var residualValue = msrp * (residualPercent / 100);
// 3. Money Factor (APR / 2400)
var moneyFactor = apr / 2400;
// 4. Monthly Depreciation
var monthlyDepreciation = (adjustedCapCost – residualValue) / term;
if (monthlyDepreciation < 0) monthlyDepreciation = 0;
// 5. Monthly Finance Fee (Rent Charge)
// Formula: (Adjusted Cap Cost + Residual Value) * Money Factor
var monthlyFinance = (adjustedCapCost + residualValue) * moneyFactor;
// 6. Total Monthly Payment
var totalMonthly = monthlyDepreciation + monthlyFinance;
// Format results
document.getElementById('monthlyPaymentDisplay').innerText = '$' + totalMonthly.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('breakdownCapCost').innerText = '$' + adjustedCapCost.toLocaleString();
document.getElementById('breakdownResidual').innerText = '$' + residualValue.toLocaleString();
document.getElementById('breakdownDepreciation').innerText = '$' + monthlyDepreciation.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('breakdownFinance').innerText = '$' + monthlyFinance.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('leaseResultContainer').style.display = 'block';
}
Understanding How Your Car Lease Payment is Calculated
Leasing a vehicle is often more complex than a standard car loan. Instead of paying for the entire value of the car, you are essentially paying for the depreciation of the vehicle over the time you drive it, plus a financing fee known as the money factor.
Key Components of a Car Lease
MSRP: The Manufacturer's Suggested Retail Price. This is the starting point for negotiations.
Capitalized Cost (Cap Cost): The "sale price" of the vehicle. You can often negotiate this down from the MSRP just like a purchase.
Residual Value: This is the estimated value of the car at the end of the lease. It is set by the leasing company. A higher residual value means a lower monthly payment because you are paying for less depreciation.
Money Factor: This is the interest rate for the lease. To convert a money factor to a standard APR, multiply it by 2,400. For example, a money factor of 0.002083 is approximately 5% APR.
The Mathematical Formula
The monthly payment consists of two primary parts:
The sum of these two figures gives you your base monthly payment before taxes and local fees are applied.
Example Lease Scenario
Imagine you want to lease a SUV with an MSRP of $40,000. You negotiate the price down to $38,000 and provide a $2,000 down payment. Your adjusted cap cost is now $36,000.
If the 36-month residual value is 60%, the car will be worth $24,000 at the end of the lease. The total depreciation you pay for is $12,000 ($36,000 – $24,000). Over 36 months, that's $333.33 per month in depreciation.
Assuming an APR of 4% (Money Factor of 0.00166), the monthly finance fee would be ($36,000 + $24,000) × 0.00166 = $99.60. Your total estimated payment would be $432.93 per month.
Tips to Lower Your Lease Payment
To get the best deal on a lease, focus on these three variables:
Negotiate the Selling Price: Many people don't realize you can negotiate the "Cap Cost" just like you would if you were buying the car.
Check for Rebates: Manufacturers often offer "lease cash" or incentives that reduce the cap cost directly.
Maintain Good Credit: The Money Factor is heavily dependent on your credit score. A higher score earns you a lower money factor, reducing the rent charge significantly.