Car Lease Payment Calculator
Estimate your monthly car lease payments based on MSRP, money factor, and residual value.
Estimated Monthly Payment
$0.00
Depreciation:
Finance Fee:
How Car Lease Payments are Calculated
Understanding your car lease payment is crucial for negotiating a fair deal at the dealership. Unlike a traditional car loan where you pay for the entire value of the vehicle, a lease only charges you for the portion of the car's value that you "use up" during the term.
The Core Components of a Lease
- Gross Capitalized Cost: This is the negotiated price of the vehicle (MSRP plus any added fees).
- Capitalized Cost Reduction: This includes your down payment, trade-in credit, and manufacturer rebates that lower the amount being financed.
- Residual Value: This is the predicted value of the car at the end of the lease. High residual values lead to lower monthly payments.
- Money Factor: This is essentially the interest rate for the lease. To convert a money factor to APR, multiply it by 2,400.
The Mathematical Formula
The monthly payment consists of two primary parts: the Depreciation Fee and the Finance Fee (Rent Charge).
1. Depreciation Fee: (Net Cap Cost – Residual Value) / Term in Months
2. Finance Fee: (Net Cap Cost + Residual Value) × Money Factor
Total Payment: Depreciation Fee + Finance Fee (+ applicable sales tax).
Example Calculation
Suppose you lease a $40,000 car for 36 months. The residual value is 60% ($24,000), you put $3,000 down, and the money factor is 0.0020 (4.8% APR).
- Net Cap Cost: $40,000 – $3,000 = $37,000
- Depreciation Part: ($37,000 – $24,000) / 36 = $361.11
- Finance Part: ($37,000 + $24,000) * 0.0020 = $122.00
- Total Monthly Payment: $483.11