Car Lease Calculator
Estimate your monthly car lease payments using MSRP, Money Factor, and Residual Values.
How to Calculate Your Car Lease Payment
Leasing a car can be more complex than a standard auto loan because the payment is split into two distinct parts: depreciation and the "rent charge." Understanding these components allows you to negotiate better deals at the dealership.
1. The Capitalized Cost
This is essentially the price of the vehicle. To find your Net Capitalized Cost, you take the negotiated price of the car and subtract your down payment and any trade-in equity. The lower this number, the lower your monthly payment.
2. Residual Value
The residual value is what the leasing company estimates the car will be worth at the end of your lease. This is calculated as a percentage of the original MSRP. For example, a $40,000 car with a 60% residual value will be worth $24,000 after the term. You only pay for the value you "use" (the $16,000 difference).
3. Money Factor (Interest)
The Money Factor is the lease's interest rate. Unlike a standard APR, it is expressed as a small decimal. To convert a Money Factor to an APR, multiply it by 2400. For example, a money factor of 0.00125 is equivalent to a 3% APR.
Calculation Example
Imagine a car with an MSRP of $30,000, a negotiated price of $28,000, and a 36-month term. If the residual value is 50% ($15,000) and the money factor is 0.0015:
- Monthly Depreciation: ($28,000 – $15,000) / 36 = $361.11
- Monthly Rent Charge: ($28,000 + $15,000) * 0.0015 = $64.50
- Base Payment: $425.61 + taxes.
Leasing Tips for Better Rates
- Negotiate the Sale Price: Most people don't realize that the "Cap Cost" is negotiable, just like when buying a car.
- Check for Incentives: Manufacturers often offer "subvented" leases with artificially high residual values or very low money factors.
- Mind the Mileage: Choosing a higher mileage limit (e.g., 15,000 miles vs 10,000) will lower the residual value and increase your monthly payment.