Vehicle Lease Agreement Form FAQ - United States


Vehicle Lease Form FAQ
How are monthly payments calculated?

There are two components of the calculation, the lease payment and the interest owed.

  • The lease payment calculation is as follows:

(Price - Residual Value) / Term of the Lease

The price is the cost of the vehicle, minus any trade in rebate or cash back.

The residual value is the value of the vehicle that’s left on the vehicle at the end of the lease. Typically, it’s 35 to 58% of the full retail value.

Term of the lease is how long the lease is for, typically measured in months and it’s at least 12 months.

  • The interest payment calculation is as follows:

(Price + Residual Value) x Money Factor

The money factor is calculated by taking the interest rate and divided by 2400. (e.g. 7% is 0.07, the money factor for 7% interest is 7/2400, which equals to 0.0029.

What is the money factor?

It is the interest rate used in the calculation of the Lease. It is the interest rate divided by 2400. For example, if the interest rate is 7%, the money factor would equal to 7/2400, which is 0.00292.

What is supplementary warranty?

It is warranty for repair from either the Lessor or a third party that is in addition to the manufacturer’s warranty. It will commence upon the expiration of the factory warranty from the vehicle manufacturer.

 

Ready to create a free Vehicle Lease Agreement Form?
Know someone who could benefit from legal FAQs? Pass this along:
back to top