LH Calculator and how to use it

@mllcb42 Thank you for the incredibly helpful resource! Posting them on the Calculator page as Calculator 101!

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Hi thank you for your informative post. However I am getting a very large difference in my monthly payments when I calculate it manually vs when I use the calculator. Can you let me know if the formula I am using is correct? Or if I just have a misunderstanding on how to calculate leasing price.

Monthly Payment (excluding tax and interest) = [ (The Agreed Sell price of the car) - (MSRP * RV ) ] / Months of Car being lease. Then once you get the Monthly Payment multiply it by the (MF * 2400)/100 to calculate what monthly payment would be including interest.
This example is excluding down payment and Taxes.

Example is A car with MSRP 100,000, dealer agreed to lease at 90,000 ( 10% cap reduction), 36 months 10,000 miles/yr with MF 0.00200 and RV 60%. When I used the lease hacker calculator plugging those values I get a Pre-Tax Monthly Payment of 1,157.

However when I do it manually I get: 100,000 * .60 = 60,000 RV. 90,000-60,000 = 30,000 of deprecation 30,000/36 = 833.33 a month * (0.00200 * 2400)/100 = 39.99 of interest per month
Total Pre-Tax Monthly Payment is 833.33 + 39.99 = 873.32.

Am I doing something wrong? That is a huge difference from 1,157 to 873.32. Total of 10,212 dollars over 36 months. Sorry for the long post. If anyone can help I would greatly appreciate it. Thanks

You’re missing a couple critical parts in your calculations here:

  • The depreciation amount is the delta between your adjusted cap cost and the residual value. That generally means agreed on price - incentives + upfront taxes and fees. Those taxes and fees are often not an insignificant amount.

  • Your rent charge amount is way off.

Monthly rent charge = MF * (adjusted cap cost + residual value)

I’m the case of your .002 MF example, your monthly rent charge would be .002*(90000+60000)=300

There is an article on the LH website explaining this.

“How to calculate payments by hand”

Question for LH Calculator - do we modify the sales tax or is that set at 9%? Texas sales tax is 6.25%.

Set it to your tax rate


When people start asking how to work the calculator and what the numbers mean, I think you should just start linking this.