Car Lease Monthly Payment Calculator
Total Finance Charge:
How Car Lease Payments are Calculated
Understanding how a car lease is calculated can save you thousands at the dealership. Unlike a standard car loan, where you pay down the entire principal, a lease only charges you for the value the car loses while you drive it, plus interest and fees.
The Depreciation Fee: This is the core of your payment. It is calculated by taking the "Adjusted Capitalized Cost" (the price you negotiated minus your down payment) and subtracting the "Residual Value" (what the car is worth at the end of the lease). This total is divided by the number of months in the term.
The Money Factor: This is the lease version of an interest rate. 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.
Realistic Example Calculation
Imagine you are leasing a SUV with an MSRP of $40,000.
- Negotiated Price: $38,000
- Down Payment: $2,000
- Residual Value (55%): $22,000
- Term: 36 Months
- Money Factor: 0.0015 (3.6% APR)
In this scenario, your monthly depreciation would be ($36,000 – $22,000) / 36 = $388.89. Your monthly finance fee would be ($36,000 + $22,000) * 0.0015 = $87.00. Your total monthly payment would be $475.89 (plus local taxes).