Auto Lease Calculator
Estimate your monthly car lease payments with tax and finance fees.
Estimated Monthly Payment
Understanding How Car Leases Are Calculated
Leasing a car is different from buying one because you are only paying for the vehicle's depreciation during the time you drive it, plus interest and taxes. To get the best deal, you need to understand the four main components used in our calculator.
1. Gross Capitalized Cost vs. Adjusted Cap Cost
The Gross Capitalized Cost is the negotiated price of the vehicle. When you subtract your down payment and trade-in value, you get the Adjusted Capitalized Cost. This is the actual amount being financed.
2. Residual Value
The Residual Value is what the leasing company predicts the car will be worth at the end of your lease. It is expressed as a percentage of the MSRP. A higher residual value is better for you because it means the car depreciates less, leading to lower monthly payments.
3. Money Factor
The Money Factor is the lease version of an interest rate. It is often written as a small decimal (e.g., 0.00125). To find the equivalent APR (Annual Percentage Rate), multiply the money factor by 2,400. For example, 0.00125 x 2,400 = 3% APR.
4. Lease Calculation Formula
The calculation consists of two main parts:
- Depreciation Fee: (Adjusted Cap Cost – Residual Value) / Lease Term
- Finance Fee: (Adjusted Cap Cost + Residual Value) × Money Factor
The sum of these two makes up your base monthly payment, which is then subject to your local sales tax.
Example Calculation
If you lease a car with an MSRP of $40,000, a negotiated price of $38,000, a $2,000 down payment, a 36-month term, a 60% residual, and a 0.0015 money factor:
- Adjusted Cap Cost: $38,000 – $2,000 = $36,000
- Residual Value: $40,000 × 0.60 = $24,000
- Depreciation: ($36,000 – $24,000) / 36 = $333.33
- Finance Fee: ($36,000 + $24,000) × 0.0015 = $90.00
- Base Payment: $333.33 + $90.00 = $423.33