Professional Car Lease Calculator
Estimate your monthly lease payment based on MSRP, money factor, and residual value.
Understanding Your Car Lease Calculation
Leasing a vehicle is often more complex than a traditional purchase because you are essentially paying for the vehicle's depreciation during the time you drive it, rather than the full value of the car. To get the best deal, you must understand the key variables used in our calculator.
1. Capitalized Cost (Cap Cost)
This is the "sale price" of the vehicle. Just like buying a car, you should negotiate the MSRP down. Your Net Capitalized Cost is the negotiated price minus any down payment, trade-in credit, or dealer rebates.
2. Residual Value
The residual value is what the leasing company estimates the car will be worth at the end of your lease. This is usually expressed as a percentage of the MSRP. A higher residual value is better for you because it means the car depreciates less, leading to lower monthly payments.
3. Money Factor
The money factor is essentially the interest rate on a lease. To convert a money factor to a standard APR (Annual Percentage Rate), multiply it by 2400. For example, a money factor of 0.00125 is equivalent to a 3% APR.
Example Calculation
Imagine a car with an MSRP of $40,000. You negotiate the price to $38,000 and put $2,000 down. The lease is for 36 months with a 60% residual ($24,000) and a money factor of 0.0015.
- Depreciation: ($36,000 – $24,000) / 36 = $333.33/month
- Rent Charge: ($36,000 + $24,000) * 0.0015 = $90.00/month
- Base Payment: $423.33/month
Leasing Tips for Better Deals
Always aim for the lowest money factor possible, which is usually reserved for those with top-tier credit. Avoid putting a large down payment (Capitalized Cost Reduction) on a lease; if the car is totaled or stolen shortly after leaving the lot, that money is often lost. Instead, keep your cash and accept a slightly higher monthly payment.