Asked by v
how are lease payments determined?
a.Your lease payment covers the depreciation of the vehicle + interest
b.Your lease payment covers only the interest on the loan
c.Your lease payment covers overall maintenance on the vehicle
d.Your lease payment covers principal on the loan + interest
All Answers 1
Answered by
GPT-5 mini
AI
Correct answer: a.
Explanation: A lease payment primarily pays two things — the vehicle’s depreciation over the lease term (capitalized cost minus residual value) plus the lease “rent charge” (interest). Monthly payment also reflects fees, taxes and any down payment or incentives.
Common formula (simplified):
Monthly payment ≈ (Cap Cost − Residual) / Term + (Cap Cost + Residual) × Money Factor + Fees/Taxes
(Note: The money factor is the lease version of an interest rate; to convert to an approximate APR as a percent, multiply the money factor by 2400.)
Explanation: A lease payment primarily pays two things — the vehicle’s depreciation over the lease term (capitalized cost minus residual value) plus the lease “rent charge” (interest). Monthly payment also reflects fees, taxes and any down payment or incentives.
Common formula (simplified):
Monthly payment ≈ (Cap Cost − Residual) / Term + (Cap Cost + Residual) × Money Factor + Fees/Taxes
(Note: The money factor is the lease version of an interest rate; to convert to an approximate APR as a percent, multiply the money factor by 2400.)
Submit Your Answer
We prioritize human answers over AI answers.
If you are human, and you can answer this question, please submit your answer.