Lease Length Calculator

FAQs

1. How are lease terms calculated?: Lease terms are typically calculated based on factors like the duration of the lease (e.g., 12 months, 36 months), monthly lease payments, and any additional terms or conditions negotiated between the lessor and lessee.
2. How do you calculate lease expiration date?: The lease expiration date is determined by adding the lease term (in months or years) to the lease start date.
3. How do you calculate a good lease deal?: A good lease deal considers factors like the negotiated monthly payment, down payment, lease term, residual value, and interest rate. Lower monthly payments and a higher residual value often make for a better deal.
4. How much is a lease payment on a $45,000 car?: Lease payments depend on factors like the car's residual value, lease term, money factor (interest rate), and down payment. For estimation purposes, a $45,000 car might have monthly payments ranging from $400 to $800 or more.
5. What is the 90% lease rule?: The 90% lease rule refers to a guideline in accounting standards (like ASC 842) that requires companies to recognize lease liabilities on their balance sheets if the present value of lease payments is 90% or more of the asset's fair market value.
6. How do you calculate lease rent?: Lease rent is typically calculated as the monthly payment amount agreed upon in the lease contract.
7. What happens to a lease when it expires?: When a lease expires, the lessee typically has options like returning the leased asset, purchasing it at a predetermined price (if it's a finance lease), or renegotiating the lease terms.
8. Is ASC 842 short term or long term?: ASC 842 deals with both short-term and long-term leases, as it provides guidelines for recognizing and accounting for lease liabilities and assets on financial statements.
9. How to determine lease term under ASC 842?: The lease term under ASC 842 is determined based on the non-cancellable period of the lease plus any optional renewal periods if it's reasonably certain that the lessee will exercise them.
10. Is leasing a good idea in 2023?: Whether leasing is a good idea in 2023 or any other year depends on your specific financial situation, needs, and preferences. Leasing can offer benefits like lower monthly payments but may have limitations compared to buying.
11. How do you calculate lease or buy?: To decide between leasing or buying, compare the total cost of ownership for both options, including factors like purchase price, monthly payments, depreciation, and resale value.
12. How does a lease work?: In a lease, a lessee (individual or business) makes regular payments to use an asset owned by a lessor (leasing company or individual) for a specified period. The lessee returns the asset at the end of the lease term.
13. How much is too much for a lease payment?: The affordability of a lease payment depends on your financial situation. As a general guideline, lease payments should not exceed 15% of your monthly income.
14. What is a good money factor on a lease in 2023?: A good money factor (interest rate) on a lease in 2023 may vary depending on market conditions and creditworthiness. Typically, a lower money factor is preferable, such as around 0.0015 or lower.
15. Is it better to lease or finance a car?: The choice between leasing and financing depends on individual preferences and financial goals. Leasing may offer lower monthly payments, while financing allows ownership of the car after payments are complete.
16. What are the new lease rules?: The new lease rules, such as ASC 842, changed lease accounting standards to require the recognition of lease assets and liabilities on financial statements, affecting how leases are reported by businesses.
17. What is the longest lease term for a car?: Lease terms for cars typically range from 24 to 60 months (2 to 5 years). Some commercial leases may have longer terms.
18. What is a 3/6/9 lease?: A 3/6/9 lease typically refers to a lease term structure where the lessee has the option to return the car at 3, 6, or 9 months without penalties, providing flexibility.
19. How can I lower my car lease payment?: You can lower your car lease payment by negotiating a lower purchase price, choosing a car with a higher residual value, making a larger down payment, or opting for a longer lease term.
20. Is it a good idea to lease a car?: Leasing a car can be a good idea if you prefer driving a new car every few years and want lower monthly payments. However, it's essential to consider your specific needs and financial situation.
21. What is the initial payment on a lease car?: The initial payment on a lease car typically includes the first month's lease payment, a security deposit, and other fees, which can vary depending on the lease agreement.
22. What are the disadvantages of buying leasehold property?: Disadvantages of buying leasehold property may include ongoing lease payments, potential for lease extensions, and restrictions imposed by the freeholder.
23. Can I sell my leasehold property?: Yes, you can sell your leasehold property, but you'll need to comply with the terms of your lease and may need to obtain consent from the freeholder.
24. What is forfeiture of lease?: Forfeiture of lease occurs when a leaseholder loses their rights to the property due to non-compliance with lease terms, often involving non-payment of rent or breaches of lease conditions.
25. What is the ASC 842 12 month rule?: The ASC 842 12 month rule allows lessees to exclude certain short-term leases (12 months or less) from recognition on the balance sheet, simplifying accounting treatment.
26. Does ASC 842 affect tax return?: ASC 842 primarily affects financial reporting and accounting treatment, rather than tax returns. Tax implications may vary based on jurisdiction and tax laws.
27. What does ASC 842 stand for?: ASC 842 stands for "Accounting Standards Codification 842," which is the Financial Accounting Standards Board (FASB) standard that governs lease accounting.
28. What are the 5 criteria for a lease?: The 5 criteria for a lease include the transfer of ownership, a specified asset, economic benefits, control over the asset, and a lease term.
29. What are the two types of leases under ASC 842?: Under ASC 842, there are two main types of leases: finance leases (formerly capital leases) and operating leases.
30. What are the GAAP rules for operating leases?: Under GAAP rules, operating leases are recorded as rent expenses on the income statement rather than as assets and liabilities on the balance sheet.
31. Why are leases so expensive now?: Lease prices may be influenced by factors such as high demand for certain vehicles, supply chain disruptions, and rising manufacturing costs.
32. What month is the best time to lease?: The best time to lease a car can vary, but many experts suggest looking for deals toward the end of the calendar year or the end of the fiscal quarter.
33. How long do most leases last?: Most car leases last between 24 to 36 months (2 to 3 years), but lease terms can vary based on individual preferences and lease agreements.
34. What does Suze Orman say about leasing a car?: Suze Orman generally advises against leasing cars, preferring car ownership as a better financial decision.
35. Is it smarter to buy or lease?: The decision to buy or lease depends on individual financial goals and preferences. Buying offers ownership, while leasing offers lower monthly payments and the ability to drive a new car regularly.
36. Is leasing always cheaper than buying?: Leasing can be cheaper in terms of monthly payments, but buying can be more cost-effective in the long run if you plan to keep the vehicle for an extended period.
37. What is a lease for dummies?: A lease, in simple terms, is a contract that allows one party to use an asset owned by another party for a specified period in exchange for periodic payments.
38. Do you pay interest on a lease?: Yes, lease payments often include interest charges, which are referred to as the "money factor" or "lease rate."
39. What are the pros and cons of lease to own?: Pros of lease to own include the potential to purchase the asset at the end of the lease, while cons include potentially higher overall costs compared to traditional financing.
40. Why shouldn't you put money down on a lease?: Some experts recommend avoiding large down payments on leases because if the car is stolen or totaled, you may lose that money.
41. Is leasing more expensive than renting?: Leasing and renting can be similar in cost, but leasing typically involves longer-term commitments, such as leasing a car, whereas renting is often associated with shorter-term agreements.
42. Can you negotiate money factor on a lease?: Yes, you can often negotiate the money factor (interest rate) on a lease, just as you would negotiate the purchase price or other terms.
43. What is the downside of extending a car lease?: Extending a car lease may result in higher overall costs, as you'll continue making payments and potentially face additional maintenance expenses.
44. How much of a car payment can I afford?: A common guideline is that car payments should not exceed 15% of your monthly take-home pay to ensure it fits within your budget.
45. Is it financially smarter to lease a car?: Whether leasing a car is financially smarter depends on your individual circumstances and preferences. Leasing can offer lower monthly payments but may involve ongoing costs.
46. Does leasing a car build credit?: Yes, making on-time lease payments can positively impact your credit score and build credit history, similar to financing a car.
47. What happens at the end of a car lease?: At the end of a car lease, you typically have options such as returning the car, purchasing it at the residual value, or exploring a new lease or purchase.
48. How long should a new lease be?: The ideal lease term varies depending on your preferences and needs, but common lease terms range from 24 to 48 months.
49. What is the new lease standard called?: The new lease standard is called ASC 842, and it is issued by the Financial Accounting Standards Board (FASB).
50. Which car lease term is best?: The best car lease term depends on your preferences. Shorter terms (e.g., 24 months) offer flexibility, while longer terms (e.g., 36 months) often have lower monthly payments.
51. How long is best to lease a car?: The ideal lease duration depends on how often you like to change vehicles and your budget. Many people find 36-month leases to be a good balance.
52. Is a 5-year car lease too long?: A 5-year car lease is relatively long and may not be common. Most car leases are shorter, typically ranging from 24 to 48 months.
53. What does 3/35 mean in car leasing?: "3/35" often refers to a lease term of 3 years (36 months) and 35,000 total allowable miles over the lease duration.
54. How are leases calculated?: Lease calculations involve factors like the vehicle's price, lease term, residual value, money factor (interest rate), and any down payment.
55. What is a que es lease buyout?: "Que es lease buyout" translates to "What is a lease buyout?" A lease buyout is the option to purchase the leased asset at the end of the lease term.
56. Can I trade in a leased car?: Yes, you can often trade in a leased car toward the purchase or lease of a new vehicle, but the specifics may vary depending on the lease terms and dealership policies.
57. Will car lease prices go down in 2023?: Car lease prices can fluctuate based on various factors, including market conditions and supply and demand. Predicting future prices is challenging.
58. What are the disadvantages of choosing the lease?: Disadvantages of leasing include mileage restrictions, ongoing monthly payments, potential lease-end charges, and limited ownership rights.
59. Why Leasing a car is smart?: Leasing a car can be smart for those who prefer driving new vehicles with lower monthly payments and are not concerned with long-term ownership.
60. What is the formula for minimum lease payments?: The formula for minimum lease payments under ASC 842 includes the present value of lease payments and the present value of the residual value guaranteed by the lessee.
61. Should you avoid leasehold?: Avoiding leasehold depends on your preferences and the specific property. Some people prefer freehold properties, while others are comfortable with leasehold.
62. Why would anyone buy a leasehold?: Buyers may choose leasehold properties due to location, affordability, or specific housing options not available with freehold properties.
63. When should you sell a leasehold?: Selling a leasehold property can depend on personal circumstances and market conditions. It's often best to consult with a real estate professional.
64. What happens to leasehold property?: Leasehold property reverts to the freeholder or landlord at the end of the lease term, unless the lease is extended or renewed.
65. What is the difference between forfeiture and surrender of lease?: Forfeiture involves losing lease rights due to non-compliance, while surrender is a voluntary return of lease rights by the lessee to the lessor.
66. What are the two types of forfeiture?: The two types of forfeiture are "re-entry forfeiture" (lessor takes back the property) and "waiver forfeiture" (lessor waives the right to terminate the lease).
67. Does ASC 842 apply to 12-month leases?: ASC 842 includes exemptions for short-term leases (12 months or less), which do not require recognition of assets and liabilities on the balance sheet.
68. How to determine lease term under ASC 842?: Lease term under ASC 842 includes the non-cancellable period and any options that are reasonably certain to be exercised by the lessee.