Lease Analysis Methodology

Primary sources

Consumer vehicle leases are governed by the Consumer Leasing Act (15 USC 1667) and implemented by Regulation M (12 CFR Part 1013), administered by the CFPB. Reg M requires disclosure of the depreciation amount, rent charge, and total monthly payment — the three components our lease calculator decomposes.

Residual values (the agreed vehicle value at lease end) are published by NADA and captive finance arms (e.g., NMAC, BMWFS, Ally). We use NADA segment averages as defaults; actual residuals from the lease contract should be entered for precision.

Monthly payment formula

Lease payment = depreciation_fee + finance_fee. Depreciation fee = (cap_cost - residual) / term_months. Finance fee = (cap_cost + residual) × money_factor. This is the industry-standard formula used by all major captive finance companies and published in NADA's Lease Guide.

Money factor converts to APR by multiplying by 2,400 (e.g., money factor 0.00125 = 3.0% APR). We display both to allow comparison against loan APR.

Multiple Security Deposits (MSDs)

MSDs reduce the money factor by 0.00007 per deposit (per manufacturer programs, typically up to 7 MSDs maximum). This is a non-standard optimization not required by Reg M — we model it because it is a legal, lessee-favorable option that most lessees are not aware of.

Limitations

Acquisition fees, disposition fees, wear-and-tear assessments, and excess mileage charges are lease-specific and vary by OEM — we show fields for these but default to zero. Closed-end lease residual values are set by the lessor and cannot be negotiated in most cases. Open-end leases (commercial) follow different residual rules.

Update protocol

This category is reviewed quarterly. Immediate updates are triggered by changes to the primary source documents listed in the citations above — rate table revisions, new agency guidance, or regulatory amendments.

Error reports go to info@bedrockatools.com. Corrections are published on our corrections page.