Leasing a car can be a complex process involving terms like "Money Factor" and "Residual Value." This calculator simplifies the process by breaking down exactly how your monthly payment is structured. To get an accurate estimate, you will need the vehicle's MSRP, the expected residual value (usually provided by the dealer), and the interest rate (APR).
Understanding Lease Terminology
Gross Capitalized Cost: The negotiated price of the vehicle plus any added fees or accessories.
Residual Value: The estimated value of the car at the end of the lease. This is set by the leasing company and expressed as a percentage of the MSRP.
Money Factor: This is the interest rate for the lease. If you have an APR, divide it by 2400 to find the money factor.
Capitalized Cost Reduction: Any down payment, trade-in value, or manufacturer rebates that lower the amount you are financing.
Example Calculation
Imagine you are leasing a car with the following details:
Detail
Value
MSRP (Negotiated)
$40,000
Down Payment
$4,000
Residual Value
55% ($22,000)
Lease Term
36 Months
APR
4.8% (0.002 Money Factor)
In this scenario, your monthly depreciation would be ($36,000 – $22,000) / 36 = $388.89. Your monthly rent charge would be ($36,000 + $22,000) * 0.002 = $116.00. Total base payment = $504.89 plus taxes.
Leasing vs. Buying: Which is Better?
Leasing is generally better for individuals who like to drive a new car every few years and want lower monthly payments. However, buying is more cost-effective in the long run as you build equity and eventually own the asset. Always consider mileage limits, as exceeding them can result in significant fees at the end of your lease term.
function calculateLease() {
var msrp = parseFloat(document.getElementById("msrp").value);
var downPayment = parseFloat(document.getElementById("downPayment").value) || 0;
var tradeIn = parseFloat(document.getElementById("tradeIn").value) || 0;
var residualPercent = parseFloat(document.getElementById("residualValue").value);
var leaseTerm = parseFloat(document.getElementById("leaseTerm").value);
var apr = parseFloat(document.getElementById("apr").value);
var taxRate = parseFloat(document.getElementById("taxRate").value) || 0;
if (!msrp || !residualPercent || !leaseTerm || isNaN(apr)) {
alert("Please fill in all required fields with valid numbers.");
return;
}
// 1. Calculate Adjusted Cap Cost
var capReduction = downPayment + tradeIn;
var adjCapCost = msrp – capReduction;
// 2. Calculate Residual Value
var residualValue = msrp * (residualPercent / 100);
// 3. Calculate Depreciation Fee
var depreciationFee = (adjCapCost – residualValue) / leaseTerm;
// 4. Calculate Rent Charge (Interest)
// Money Factor = APR / 2400
var moneyFactor = apr / 2400;
var rentCharge = (adjCapCost + residualValue) * moneyFactor;
// 5. Calculate Taxes
var baseMonthly = depreciationFee + rentCharge;
var monthlyTax = baseMonthly * (taxRate / 100);
// 6. Total Payment
var totalMonthly = baseMonthly + monthlyTax;
// Display Results
document.getElementById("adjCapCost").innerText = "$" + adjCapCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resValAmount").innerText = "$" + residualValue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("monthlyDep").innerText = "$" + depreciationFee.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("monthlyRent").innerText = "$" + rentCharge.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("monthlyTax").innerText = "$" + monthlyTax.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("totalMonthly").innerText = "$" + totalMonthly.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("results").style.display = "block";
}