Estimate your monthly lease payment using MSRP, money factor, and residual value.
Lease Breakdown
Monthly Depreciation:$0.00
Monthly Rent Charge:$0.00
Base Monthly Payment:$0.00
Monthly Tax:$0.00
Total Monthly Payment:$0.00
Understanding How Car Leases are Calculated
Leasing a car is different from a standard auto loan. When you lease, you are essentially paying for the vehicle's depreciation during the time you drive it, plus interest (known as the money factor) and taxes.
Key Leasing Terms Defined
Gross Capitalized Cost: This is the total price of the vehicle, including the negotiated sales price plus any fees or add-ons.
Capitalized Cost Reduction: This is any amount that reduces the price you're financing, such as a down payment, trade-in credit, or manufacturer rebates.
Residual Value: This is the predicted value of the car at the end of the lease. This is set by the leasing company and is non-negotiable.
Money Factor: This represents the interest rate. To convert a money factor to an APR (Annual Percentage Rate), multiply it by 2,400. For example, a 0.0025 money factor equals 6% APR.
Lease Term: The duration of the lease agreement, typically expressed in months (e.g., 24, 36, or 48 months).
The Lease Formula
To calculate your monthly payment manually, you follow these three steps:
Monthly Depreciation: (Net Capitalized Cost – Residual Value) ÷ Term
Total Payment: (Depreciation + Rent Charge) + Sales Tax
Example Calculation
If you lease a car with a Gross Cap Cost of $40,000, a Down Payment of $4,000, a Residual Value of $22,000, a Term of 36 months, and a Money Factor of 0.0025: