Car Lease Calculator
Calculate your estimated monthly car lease payment.
(e.g., 60 for 60%)
(e.g., 5.5 for 5.5%)
(e.g., 7 for 7%)
Estimated Monthly Payment:
Understanding Your Car Lease Payment
Leasing a car offers a way to drive a new vehicle with lower monthly payments compared to financing a purchase. However, the calculation behind your monthly payment can seem complex. This calculator helps demystify the process by breaking down the key components that determine your lease cost.
How the Car Lease Payment is Calculated
A car lease payment is primarily composed of two main parts: the depreciation cost and the finance charge (money factor). Taxes and fees are then applied to these components.
- Depreciation Cost: This is the portion of the car's value that you will essentially "use up" during the lease term. It's calculated as follows:
- Adjusted Capitalized Cost: This is the starting price of the lease. It's typically the vehicle's negotiated price (capitalized cost) minus any capitalized cost reduction (like a down payment, trade-in equity, or rebates).
Formula: Adjusted Capitalized Cost = Vehicle Price – Capitalized Cost Reduction - Residual Value: This is the predicted value of the car at the end of the lease term. It's usually expressed as a percentage of the original MSRP.
Formula: Residual Value = Vehicle Price * (Residual Value Percentage / 100) - Depreciable Amount: The total amount the car is expected to lose in value during the lease.
Formula: Depreciable Amount = Adjusted Capitalized Cost – Residual Value - Monthly Depreciation: The depreciable amount spread over the lease term.
Formula: Monthly Depreciation = Depreciable Amount / Lease Term (in months)
- Adjusted Capitalized Cost: This is the starting price of the lease. It's typically the vehicle's negotiated price (capitalized cost) minus any capitalized cost reduction (like a down payment, trade-in equity, or rebates).
- Finance Charge (Rent Charge): This is the cost of borrowing money to lease the car. Leases use a "money factor" instead of an annual interest rate, but they are related. The money factor is typically the annual interest rate divided by 2400.
- Monthly Interest Rate: Convert the money factor to a monthly rate.
Formula: Monthly Interest Rate = (Annual Interest Rate / 100) / 12 (Note: This simplified calculation uses the APR directly for clarity and common calculator implementations. A more precise method involves converting APR to money factor: Money Factor = APR / 2400) - Finance Charge Calculation: This is applied to the average of the capitalized cost and residual value over the lease term.
Formula: Finance Charge = (Adjusted Capitalized Cost + Residual Value) * Monthly Interest Rate
- Monthly Interest Rate: Convert the money factor to a monthly rate.
- Total Base Monthly Payment: The sum of the monthly depreciation and the finance charge.
Formula: Total Base Monthly Payment = Monthly Depreciation + Finance Charge - Sales Tax: This is applied to the total base monthly payment in most states.
Formula: Sales Tax Amount = Total Base Monthly Payment * (Sales Tax Rate / 100) - Estimated Monthly Lease Payment: The final figure you'll pay each month.
Formula: Estimated Monthly Lease Payment = Total Base Monthly Payment + Sales Tax Amount
Key Inputs Explained
- Vehicle Price: The agreed-upon price of the car before lease-specific adjustments.
- Capitalized Cost Reduction: Any upfront payments that reduce the price you finance, such as a down payment, lease cash from the manufacturer, or positive equity from a trade-in.
- Residual Value Percentage: Set by the leasing company, this is the expected value of the car at the end of the lease term, expressed as a percentage of the original MSRP. A higher residual value means lower depreciation and potentially lower payments.
- Lease Term (Months): The duration of the lease contract.
- Annual Interest Rate (APR): The annual cost of financing, expressed as a percentage. It influences the finance charge.
- Sales Tax Rate: The applicable tax rate in your jurisdiction, usually applied to the monthly payment.
Using the Calculator
Enter the details for the vehicle you're interested in leasing. The calculator will provide an estimate of your monthly payment. Remember that this is an estimate; actual lease offers may vary based on credit approval, dealer fees, and specific program changes.
Disclaimer: This calculator provides an estimation for educational purposes. Actual lease terms and payments may differ. Consult with your dealership for precise figures.