Car Lease Payment Calculator
24 Months
36 Months
39 Months
48 Months
APR ÷ 2400 = Money Factor
Results
How to Calculate a Car Lease Payment: A Complete Guide
Understanding car lease math can save you thousands of dollars at the dealership. Unlike a standard car loan, where you pay for the entire value of the vehicle plus interest, a lease essentially covers the depreciation of the car over the time you use it.
Key Terms Explained
- Gross Capitalized Cost: This is the agreed-upon selling price of the vehicle plus any fees or taxes rolled into the lease.
- Capitalized Cost Reduction: Anything that lowers the amount you're financing, such as a down payment, trade-in credit, or manufacturer rebates.
- Residual Value: The estimated value of the car at the end of the lease. This is set by the leasing company and is usually expressed as a percentage of the MSRP.
- Money Factor: This is the interest rate of the lease. To convert a Money Factor to an APR, multiply it by 2400. For example, a money factor of 0.00125 equals a 3% APR.
The Lease Formula
The monthly lease payment consists of three primary components: Depreciation, Rent Charge, and Taxes.
- Monthly Depreciation: (Net Capitalized Cost – Residual Value) ÷ Number of Months.
- Monthly Rent Charge: (Net Capitalized Cost + Residual Value) × Money Factor.
- Total Monthly Payment: (Monthly Depreciation + Monthly Rent Charge) × (1 + Sales Tax Rate).
Realistic Example
Let's say you are leasing a SUV with an MSRP of $40,000. You negotiate the selling price to $38,000 and put $2,000 down. The 36-month residual is 60% ($24,000) and the money factor is 0.0015.
- Net Cap Cost: $38,000 – $2,000 = $36,000
- Depreciation Part: ($36,000 – $24,000) / 36 = $333.33
- Rent Charge Part: ($36,000 + $24,000) * 0.0015 = $90.00
- Pre-Tax Total: $423.33
Expert Tips for a Better Lease
To get the best deal, focus on negotiating the Selling Price just as you would if you were buying the car. Many consumers mistakenly focus only on the monthly payment, allowing dealerships to hide high interest rates or fees. Always ask for the Money Factor and check that it hasn't been "marked up" by the finance department.