Find Car Lease Payments on HP Business Calculator
Set up your HP 17BII financial calculator for car lease formula
You might ask why we’re offering instructions on setting up a business calculator, such as the popular HP 17B, 17BII, or 17BII+, to perform car lease calculations when there is already a built-in TVM (Time Value of Money) function that appears to do the same thing.
The answer is that car leases are not calculated using the Time Value of Money formula that is built into business calculators.
Car dealers and lease finance companies use a simplified formula that is easier to use and produces results that are very close to that of the TVM formula. It’s the standard leasing formula used throughout the car leasing industry. See our article, Car Lease Payment Formula for more details.
Since it’s a different formula we can use the SOLVE feature of the HP calculator (or any other calculator that allows programming and saving custom formulas) to create an easy-to-use lease payment calculator. It can also be used to perform other lease calculations as well, such as working backwards from monthly payment to find money factor.
Setting up the Calculator
Here’s how to set up the HP 17B/17BII/17BII+ lease formula:
1. Starting from the MAIN menu screen, select the SOLVE function by pressing the ^ key underneath that option
2. Select the NEW option
3. Enter the following formula: PMT = (CAP – RES) ÷ TRM + (CAP + RES) x MF
where PMT=monthly payment, CAP=net capitalized cost, RES=residual value, TRM=term, in months, and MF= money factor
4. Save the formula
Calculate Monthly Lease Payment
To use the formula to calculate monthly lease payments, simply enter values for the variables and select PMT. You’ll see the results instantly. You might have to get back to the SOLVE menu and select CALC to see and use the formula. If you have more than one formula, use the up or down arrows on the keyboard to select the correct formula.
If you have an interest APR (annual percentage rate) number instead of money factor, enter your interest rate and divide by 2400. Then press the ^ key underneath the MF variable to enter that result into the formula. Note that the result might display as .00 if your calculator is set to only display two decimal places. You can see the full precision value by pressing the “alternate function” key (the blank button just above the CLR button), then pressing SHOW (the ” .” button). Hold the button to continue viewing the value.
The calculated payment value is the “base” lease payment, which does not include sales tax. To find the payment with sales tax, simply multiply the base value by 1.XX, where XX is the sales tax rate in your county/state. Note that most states use this method of determining tax on lease payments, but some states use other methods.
Performing Other Lease Calculations
There may be times when you already know the base monthly payment amount (without sales tax) and you need to know one of the other variables. For example, lease contracts do not show Money Factor, which tells you your lease finance rate. But if you know all the other variables, you can use the lease formula you created on your HP 17B/17BII to find it, something that is difficult to do any other way.
The process of entering the known variables and then selecting MF is exactly the same as the process described above for finding monthly payment. Other variables can be found in the same way, although for some variables, the calculator has to perform a trial-and-error process that can take a few seconds to complete.
If You Don’t Have an HP 17B/17BII — There’s a App for That
If you don’t own the popular HP 17B or one of its newer versions, and don’t want to spend $100 for one, you can download an app for your iPhone called “17BII+ Financial Calculator” which is an exact functional equivalent of the real calculator, for only $7.99 (as of this writing). What a deal. Go to HP’s web site and download the Users Manual for the real calculator and it works perfectly with the iPhone app. It’s a PDF document that you can email to yourself on the iPhone, then save it in your iBooks app on the same iPhone (that’s one way to do it; there may be others).
The app is made by RLM Software which makes other calculator apps for iPhone, but none for Android at this time.