Car Lease Payment Calculator
Estimate your monthly lease payments including taxes and fees.
Understanding How Car Leases are Calculated
Leasing a car is often more complex than a standard auto loan. While a loan is based on the total price of the vehicle, a lease is essentially paying for the depreciation of the vehicle over a set period, plus interest (known as the Money Factor) and taxes.
Key Components of a Lease
1. Gross Capitalized Cost
This is the starting price of the vehicle plus any added fees (like the acquisition fee). When you negotiate a "selling price" for a lease, you are negotiating the Gross Cap Cost.
2. Residual Value
The residual value is the estimated worth of the car at the end of the lease term. This is set by the leasing company. A higher residual value results in lower monthly payments because you are paying for less depreciation.
3. Money Factor
The money factor is the interest rate on a lease. To convert a money factor to a standard APR, multiply it by 2,400. For example, a money factor of 0.00125 is equivalent to a 3% APR.
4. Lease Term
The duration of the lease, typically expressed in months. Common terms are 24, 36, or 48 months. Longer terms generally lower the payment but keep you in the car longer than the warranty may last.
How to Use This Calculator
To get an accurate estimate, follow these steps:
- Enter MSRP: The manufacturer's suggested retail price.
- Input Down Payment: Any cash you are putting upfront to reduce the capitalized cost.
- Residual Percentage: Check sites like Edmunds or your dealer for current residual rates for your specific model.
- Money Factor: This is determined by your credit score. If the dealer gives you an APR, divide it by 2400 to get the factor.
Example Calculation
Suppose you lease a $40,000 car for 36 months with a 60% residual and a money factor of 0.0015. The residual value would be $24,000. You are paying for $16,000 of depreciation over 36 months ($444/mo), plus the rent charge based on the money factor.