Enter the details of the car you're interested in to see your estimated monthly payments for both financing and leasing.
e.g., 60 for a 5-year loan
e.g., 5.5 for 5.5%
e.g., 36 for a 3-year lease
e.g., 60 for 60% of MSRP
Your Estimated Payments
$–.–
Loan Details
Monthly Loan Payment: $–.–
Total Loan Interest Paid: $–.–
Total Loan Cost: $–.–
Lease Details
Estimated Monthly Lease Payment: $–.–
Total Lease Cost (over term): $–.–
Depreciation Cost (over term): $–.–
Key Assumptions
Loan Interest Rate: –.–%
Lease Residual Value: –.–%
Lease Fees: $–.–
Loan Payment Formula (Simplified): M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where: M = Monthly Payment, P = Principal Loan Amount, i = Monthly Interest Rate, n = Total Number of Payments (Months).
Lease Payment Formula (Simplified):
Monthly Lease Payment = (Depreciation + Rent Charge) / Lease Term + Monthly Taxes (often excluded for simplicity here).
Depreciation = (Gross Capitalized Cost – Residual Value).
Gross Capitalized Cost ≈ Vehicle Price – Down Payment.
Rent Charge ≈ (Gross Capitalized Cost + Residual Value) * Money Factor.
Money Factor ≈ Annual Interest Rate / 2400.
Payment Breakdown: Loan vs. Lease
Edmunds Payment Calculator: Your Guide to Car Finance
What is the Edmunds Payment Calculator?
The Edmunds Payment Calculator is a powerful online tool designed to help car buyers and lessees estimate their potential monthly payments. It provides a clear, concise way to understand the financial implications of different auto loan and lease scenarios before visiting a dealership. This transparency empowers consumers to make informed decisions by comparing various financing options based on vehicle price, down payment, loan terms, interest rates, and lease specifics like residual value and fees.
Who should use it? Anyone considering purchasing or leasing a new or used vehicle. Whether you're a first-time buyer, looking to upgrade, or simply want to budget effectively, this calculator is an essential resource. It's particularly useful for those who want to:
Determine affordability within their budget.
Compare loan offers from different lenders.
Understand the cost differences between buying and leasing.
Negotiate financing terms more effectively.
Common misconceptions: A frequent misunderstanding is that the calculated payment is the final, all-inclusive price. However, these calculators often exclude certain variable costs like sales tax (which varies by location and can be applied differently to loans vs. leases), registration fees, and potential dealer add-ons or markups. It's crucial to remember that the calculator provides an estimate based on the inputs provided.
Edmunds Payment Calculator Formula and Mathematical Explanation
The Edmunds Payment Calculator uses standard financial formulas to estimate loan and lease payments. Understanding these formulas can demystify the numbers and help you see how each input affects your final monthly cost.
Loan Payment Calculation
The primary formula for calculating a fixed-rate loan payment is the annuity formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Monthly Payment
P = Principal Loan Amount (Vehicle Price – Down Payment)
Monthly Taxes are often estimated as a percentage of the monthly payment and are sometimes excluded from basic calculators for simplicity. Our calculator focuses on the core payment components before potential taxes.
The calculator also estimates:
Total Lease Cost = Monthly Lease Payment * Lease Term + Down Payment + Lease Fees (approximate, excluding potential taxes/fees not included in monthly payment)
Total Depreciation Cost = Vehicle Price – Residual Value
Variables Table
Variable Definitions for Auto Payment Calculations
Variable
Meaning
Unit
Typical Range
Vehicle Price
The sticker price or negotiated price of the vehicle.
$
$10,000 – $100,000+
Down Payment
Amount paid upfront before financing or leasing.
$
$0 – Vehicle Price
Loan Term
Duration of the loan in months.
Months
12 – 84
Interest Rate (Annual)
The yearly percentage charged by the lender for a loan.
%
2% – 25%+ (varies greatly)
Lease Term
Duration of the lease agreement in months.
Months
12 – 48
Residual Value (%)
The projected value of the vehicle at the end of the lease term, as a percentage of MSRP.
%
45% – 70%
Lease Fees
One-time fees associated with initiating a lease (e.g., acquisition fee, documentation fee).
$
$300 – $1,000+
Money Factor
A component used in lease calculations, representing the cost of financing. It's typically 1/3 of the annual interest rate equivalent.
Decimal
0.00050 – 0.00150+
Practical Examples (Real-World Use Cases)
Example 1: Financing a New Sedan
Sarah wants to buy a new $35,000 sedan. She plans to make a $5,000 down payment and wants to finance the rest over 60 months. She qualified for a 5.0% annual interest rate.
Calculation: Principal (P) = $30,000. Monthly interest rate (i) = 0.05 / 12 ≈ 0.004167. Number of payments (n) = 60.
Edmunds Payment Calculator Output:
Estimated Monthly Loan Payment: $635.21
Total Interest Paid: $8,132.60
Total Loan Cost: $38,132.60
Interpretation: Sarah will pay approximately $635 per month for 5 years. Over the life of the loan, she'll pay over $8,100 in interest on top of the principal she borrowed. This helps her budget and understand the true cost of financing.
Example 2: Leasing an SUV
John is interested in leasing a $45,000 SUV. The dealership offers a 36-month lease with a residual value of 55% and a money factor equivalent to 4.5% annual interest. He plans to pay $3,000 upfront (down payment and fees).
Total Depreciation Cost: $20,250 ($45,000 – $24,750)
Interpretation: John's monthly lease payment is estimated around $875. The total cost over three years is significantly less than buying the vehicle outright, but at the end of the term, he won't own the SUV. He needs to consider his driving habits and desire for vehicle ownership. This comparison is key for making the right choice.
How to Use This Edmunds Payment Calculator
Using the Edmunds Payment Calculator is straightforward. Follow these steps to get accurate payment estimates:
Enter Vehicle Price: Input the full price of the car you are considering. This is often the MSRP or the negotiated selling price.
Input Down Payment: Enter the amount you plan to pay upfront. This reduces the amount you need to finance or lease.
Specify Loan Term (for Financing): Select the number of months you want to finance the vehicle over. Longer terms mean lower monthly payments but more total interest paid.
Enter Interest Rate (for Financing): Input the annual interest rate you expect to receive. This heavily influences your monthly loan payment.
Specify Lease Term (for Leasing): Choose the duration of your lease agreement in months.
Input Residual Value (for Leasing): Enter the projected value of the vehicle at the end of the lease term, usually expressed as a percentage. Higher residuals generally lead to lower payments.
Add Lease Fees: Include any upfront fees like the acquisition fee, which adds to the initial cost but can sometimes lower the monthly payment.
Click "Calculate Payments": The calculator will instantly update with estimated monthly loan and lease payments, along with key financial details.
How to read results:
Primary Result (Monthly Payment): This is your most immediate estimate for the loan or lease. Compare these numbers against your budget.
Intermediate Values: Total interest for loans and total cost/depreciation for leases provide a deeper understanding of the long-term financial commitment.
Assumptions: Always check the interest rate and residual value used, as these are estimates and can vary based on your creditworthiness and market conditions.
Decision-making guidance: Use the results to compare financing vs. leasing. If your primary goal is lower monthly payments and you don't mind not owning the car, leasing might be attractive. If you prefer to own the vehicle long-term and build equity, financing is the way to go. Adjust inputs like down payment or loan term to see how they affect affordability.
Key Factors That Affect Edmunds Payment Calculator Results
Several critical factors influence the accuracy of your estimated car payments. Understanding these will help you interpret the results and negotiate better terms:
Vehicle Price & Depreciation: The starting price directly impacts the loan principal or the depreciating base for a lease. Higher prices mean higher payments. For leases, the vehicle's ability to hold its value (residual percentage) is crucial; a higher residual means less depreciation, lowering your lease payment.
Interest Rate / Money Factor: This is one of the most significant cost drivers. A higher annual percentage rate (APR) for loans or a higher money factor for leases directly increases your monthly payments and total interest paid over time. Lenders determine this based on your credit score, income, and the loan term.
Loan Term vs. Lease Term: Longer loan terms result in lower monthly payments but significantly increase the total interest paid over the life of the loan. Shorter lease terms might mean higher monthly payments but less overall cost if you prefer driving newer cars frequently.
Down Payment & Trade-In Value: A larger down payment reduces the amount financed (loan principal) or capitalized cost (lease), leading to lower monthly payments and less interest/depreciation cost. A strong trade-in value acts like a down payment.
Fees and Taxes: While some calculators simplify this, numerous fees (acquisition, documentation, dealer fees) and taxes (sales tax on financed amount or lease payments) add to the overall cost. Sales tax, in particular, can vary widely by state and locality, significantly impacting your final out-the-door price.
Credit Score: Your creditworthiness is paramount. A higher credit score typically unlocks lower interest rates and better money factors, dramatically reducing your overall borrowing cost. Conversely, a lower score may result in higher rates or even limited financing options.
Incentives and Rebates: Manufacturer rebates or special financing offers can significantly reduce the purchase price or APR, lowering your payments. These are often dynamic and should be factored in when possible.
Frequently Asked Questions (FAQ)
Q1: Does the Edmunds Payment Calculator include sales tax?
A: This specific calculator provides estimates based on principal, interest, and lease depreciation/rent charges. It typically does not include sales tax, registration fees, or other local taxes, which vary by location and can significantly affect the final monthly payment and total cost. Always verify these details with your dealer.
Q2: How accurate are the lease payment estimates?
A: Lease estimates are generally accurate for the core components (depreciation, rent charge). However, the money factor, residual value, and specific dealer fees can fluctuate. The final lease payment will depend on the exact terms negotiated and your credit approval.
Q3: What's the difference between a loan and a lease payment calculation?
A: Loan payments are calculated based on financing the entire purchase price (minus down payment) over a set term with interest. Lease payments are based on the depreciation of the vehicle during the lease term plus a financing charge (rent charge) and fees. You pay for the use of the vehicle, not its full ownership.
Q4: Can I use this calculator for used cars?
A: Yes, you can use this calculator for used cars by entering the vehicle's price and selecting an appropriate interest rate or lease terms that align with used vehicle financing options. However, interest rates for used cars are often higher than for new cars.
Q5: What is a "Residual Value" in a lease, and why is it important?
A: Residual value is the estimated worth of the car at the end of the lease term. It's usually set by the leasing company as a percentage of the original MSRP. A higher residual value means the car is expected to hold its value better, leading to lower depreciation costs and thus a lower monthly lease payment.
Q6: Should I put down a large down payment?
A: A larger down payment reduces the amount you finance or capitalize, leading to lower monthly payments and less interest paid overall for loans. For leases, it reduces the capitalized cost, lowering monthly payments. However, a down payment doesn't earn you equity in a leased vehicle. Consider your financial goals and budget carefully.
Q7: How does my credit score affect my payment?
A: Your credit score significantly impacts the interest rate (APR) you qualify for on a loan or the money factor used in a lease. A higher credit score generally means lower rates, resulting in lower monthly payments and less total cost over time.
Q8: What happens if I exceed the mileage limit on a lease?
A: Exceeding the agreed-upon mileage limit on a lease results in per-mile charges, typically $0.15 to $0.30 per mile over the limit, which can be very costly. This is why selecting the correct lease term and mileage allowance is crucial.
Related Tools and Internal Resources
Car Affordability Calculator – Determine how much car you can realistically afford based on your income and expenses.