
Monthly Payment Components:

Term or length of the lease: Usually 24  60 months.

Gross capitalized cost: The agreed upon value of the vehicle and any items you pay over the lease term, such as, service contracts, insurance, outstanding prior credit or lease balance and acquisition fee.

Capitalized cost reduction: The amount of any net tradein, rebate, noncash or cash you pay that reduces the gross capitalized cost.

Adjusted capitalized cost: The gross capitalized cost less the capitalized cost reduction. The amount used in calculating the base monthly payment.

The importance of these factors is clear when you see how a monthly payment is calculated. Here is an example of a lease payment calculation.

$22,700
 $2,700
$20,000
$20,000
 $8,000
$12,000
48
= $250
$20,000
+ $8,000
$28,000
x 0.004
= $112
$250
+ $112
= $362*

*Note: Monthly sales/use taxes will be added to the base monthly lease payments.
Multiplying the money factor by 24 approximates the interest rate: 0.004 x 24 = .096 = 9.6%.