Car Lease Payment Calculator
Estimate your monthly lease payments including depreciation, rent charges, and taxes.
Understanding How Car Leases Are Calculated
Leasing a car is different from buying because you are essentially paying for the vehicle's depreciation during the time you drive it, rather than the total value of the car. To get the most accurate estimate, you need to understand three core components: the Adjusted Capitalized Cost, the Residual Value, and the Money Factor.
1. The Depreciation Fee
This is the largest part of your lease payment. It is calculated by taking the Adjusted Capitalized Cost (the negotiated price minus your down payment) and subtracting the Residual Value (what the car is worth at the end of the lease). This total is then divided by the number of months in the lease term.
2. The Rent Charge
The rent charge is the cost of borrowing the money. Unlike a standard loan where interest is calculated on a declining balance, lease rent charges use the "Money Factor." The formula is: (Adjusted Cap Cost + Residual Value) × Money Factor. It may seem counter-intuitive to add the values, but this is the standard industry formula to average the finance charge over the term.
3. Sales Tax
In most states, sales tax is applied to the monthly payment. If your base payment is $400 and your local tax rate is 8%, you will pay an additional $32 per month in taxes.
Example Calculation
Imagine you lease a car with an MSRP of $40,000. You negotiate the price down to $38,000 and put $2,000 down. Your Adjusted Cap Cost is $36,000.
- Term: 36 Months
- Residual (55%): $22,000
- Money Factor: 0.0020 (4.8% APR)
Depreciation: ($36,000 – $22,000) / 36 = $388.89
Rent Charge: ($36,000 + $22,000) * 0.0020 = $116.00
Total Base Payment: $504.89 + Tax