Car Lease Calculator
Estimate your monthly car lease payments using the money factor, residual value, and capitalized cost.
Gross Capitalized Cost:
$0.00
Residual Value:
$0.00
Monthly Depreciation:
$0.00
Monthly Rent Charge:
$0.00
Estimated Monthly Payment:
$0.00
Understanding How Car Leases Work
Unlike a traditional car loan where you pay for the entire vehicle, a car lease allows you to pay only for the portion of the vehicle's value that you use during the lease term. This is why lease payments are typically lower than purchase payments.
The Core Components of a Lease
- Gross Capitalized Cost: This is the negotiated price of the vehicle plus any fees or taxes rolled into the lease.
- Capitalized Cost Reduction: Any down payment, trade-in credit, or manufacturer rebates that lower the amount being financed.
- Residual Value: The estimated value of the car at the end of the lease. High residual values usually result in lower monthly payments.
- Money Factor: This is the interest rate on the lease. To convert a money factor to an APR (Annual Percentage Rate), multiply it by 2,400.
Example Calculation
Imagine you lease a car with an MSRP of $40,000 and a negotiated price of $38,000. You put $3,000 down. The residual value is 60% ($24,000) for a 36-month term with a money factor of 0.0015.
1. Adjusted Cap Cost: $38,000 – $3,000 = $35,000.
2. Depreciation: ($35,000 – $24,000) / 36 = $305.56 per month.
3. Rent Charge: ($35,000 + $24,000) * 0.0015 = $88.50 per month.
4. Base Payment: $305.56 + $88.50 = $394.06 (plus local taxes).
Tips for Getting a Better Lease Deal
Always negotiate the sales price (Cap Cost) just as you would if you were buying the car. Focus on the Money Factor; many dealerships "mark up" the base rate provided by the bank. Lastly, ensure the mileage limit (usually 10,000 or 12,000 miles per year) matches your driving habits to avoid hefty overage fees at the end of the term.