Monthly Depreciation Payment + Monthly Finance Charge
Monthly Depreciation = (Net Capital Cost - Residual)/(lease term in months)
Monthly Finance Charge = (Net Cap Cost + Residual) * Money Factor
This is not a matter of opinion. This is a fact. I went online to see if I could locate the formula elsewhere. Please go to...
You will find that, aside from some differences in terminology, my formula is identical to there formula. Their explanation for the calculation of the monthly finance charge (i.e., the plus sign) is similar to mine (though much more clear than what I posted):
"The plus sign in the formula in step 2 for the monthly finance charge is not a typo. The finance charge is based on the sum of the cap cost and the residual, not the difference. People are used to hearing that in a lease you only "pay for only the part you use" and hence should only pay interest on the depreciation (difference between cap cost and residual). This is not the case at all. Instead, the best way to think of a lease is like a balloon loan where the principle is the cap cost and the balloon payment is the residual value which is made by turning in the car."
They also have a good general lease guide at: