Advanced Car Lease Calculator
Calculate your monthly lease payment, total depreciation, and rent charges.
How Car Lease Payments are Calculated
Understanding a car lease can be complex because it differs significantly from a traditional auto loan. Instead of paying for the entire value of the vehicle, you are essentially paying for the depreciation of the car during the time you drive it, plus interest and taxes.
1. The Capitalized Cost (Cap Cost)
This is the "sale price" of the car. Many people forget that you can negotiate the price of a leased vehicle just like a purchase. Your Net Capitalized Cost is the Sales Price minus your down payment, trade-in, and any rebates.
2. Residual Value
The Residual Value is what the leasing company predicts the car will be worth at the end of your lease. This is usually expressed as a percentage of the original MSRP. For example, if a $35,000 car has a 60% residual after 36 months, its residual value is $21,000. Your payments cover the $14,000 difference.
3. Money Factor (The Interest Rate)
The Money Factor is the lease equivalent of APR. To find the approximate APR, multiply the money factor by 2400. For example, a money factor of 0.00125 is roughly equivalent to a 3% APR (0.00125 * 2400 = 3). A lower money factor means lower monthly interest charges.
The Lease Formula
- Monthly Depreciation = (Net Cap Cost – Residual Value) / Term in Months
- Monthly Rent Charge = (Net Cap Cost + Residual Value) * Money Factor
- Base Monthly Payment = Depreciation + Rent Charge
- Total Payment = Base Payment + Monthly Sales Tax
Example Calculation
If you lease a car with a negotiated price of $30,000, a $2,000 down payment, a 60% residual on a $32,000 MSRP ($19,200), and a money factor of 0.0015 for 36 months:
- Net Cap Cost: $28,000
- Depreciation: ($28,000 – $19,200) / 36 = $244.44
- Rent Charge: ($28,000 + $19,200) * 0.0015 = $70.80
- Base Payment: $315.24 per month (plus tax)