Loans & Debt
Depreciation component
The value consumed over the lease, spread evenly across the term.
The Formula
Dep = (price - residual) / term
The value consumed over the lease, spread evenly across the term.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| P | Negotiated price | currency | Selling price of the car. |
| R | Residual value | currency | Expected value at lease end. |
| n | Term | count | Number of months. |
What Each Symbol Means
Pcurrency
Negotiated price
Selling price of the car.
Rcurrency
Residual value
Expected value at lease end.
ncount
Term
Number of months.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate a car lease payment page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate A Car Lease Payment, filed under Finance. Every number the guide produces comes from substituting into this one line.