Example 3: Life cycle of a 36-month lease versus a 60-month loan. This graph shows the typical situation in which the vehicle's value is less than the residual value at the end of the lease term. The vehicle's value may be above or below the residual value at lease-end. The graph combines graphs 1 and 2 and shows that the lease balance and loan balance are similar for the first 36 months. After 36 months the loan continues to amortize to $0 and the value of the vehicle is higher than the loan balance. This difference is shown as a shaded area called the consumer's equity in the vehicle. Lease Inputs: Loan Inputs: Initial capitalized cost $24,000.00; Amount financed $24,000.00; Residual value $12,000.00; Ending balance $0.00; Term 36 months; Term 60 months; Monthly payment $488.53; Monthly payment $486.63. Note: The Constant Yield (Actuarial) method is used for both the lease and loan amortization. Return