How is a car lease payment calculated?

Lease payment = Depreciation + Finance charge + Tax. Depreciation = (Cap Cost − Residual Value) / Term. Finance charge = (Cap Cost + Residual Value) × Money Factor. Cap cost is MSRP minus down payment, dealer discounts, and trade-in. The money factor is the interest rate divided by 2,400.

What is money factor on a car lease?

Money factor is lease financing expressed as a small decimal (e.g., 0.0025). Multiply by 2,400 to get the equivalent APR: 0.0025 × 2,400 = 6% APR. A money factor of 0.001 or lower is excellent (≤ 2.4% APR). Dealers rarely advertise money factors — you have to ask. Check Edmunds or MF forums for current rates by model.

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