Professional Car Lease Calculator
Estimate your monthly lease payments with precision.
Lease Breakdown
How Car Lease Payments are Calculated
Leasing a car is different from buying one because you are only paying for the portion of the vehicle's value that you "use up" during the lease term. Understanding the math behind your lease contract can save you thousands of dollars at the dealership.
1. The Capitalized Cost
The "Cap Cost" is essentially the negotiated price of the vehicle. To find your Adjusted Cap Cost, you subtract your down payment and trade-in value from the MSRP or negotiated price. This represents the total amount being financed.
2. Residual Value
The residual value is what the leasing company estimates the car will be worth at the end of your lease. If a $40,000 car has a 60% residual value after 36 months, the residual amount is $24,000. You are responsible for paying the $16,000 difference (the depreciation).
3. The Money Factor (Rent Charge)
In leasing, the interest rate is often called the "Money Factor." To convert an APR to a money factor, divide by 2400. For example, a 6% APR equals a 0.0025 money factor. This fee is calculated by adding the Cap Cost and the Residual Value and multiplying it by the money factor.
Example Calculation
Imagine a car with an MSRP of $30,000, a 36-month term, a 60% residual ($18,000), and a 4% APR.
- Depreciation: ($30,000 – $18,000) / 36 = $333.33/month
- Finance Fee: ($30,000 + $18,000) * (4 / 2400) = $80.00/month
- Base Payment: $413.33/month + applicable sales tax.
Tips for a Better Lease Deal
- Negotiate the Purchase Price: Many people don't realize you can negotiate the MSRP on a lease just like a purchase.
- Check the Residual: High residual values result in lower monthly payments.
- Limit Down Payments: In a lease, a large down payment (Capitalized Cost Reduction) is risky. If the car is totaled early in the lease, you rarely get that money back from insurance.