Auto Lease Payment Calculator
Estimated Monthly Payment
$0.00
How to Calculate Your Car Lease Payment
Leasing a car can be a cost-effective way to drive a new vehicle every few years, but the math behind the monthly payment is different from a traditional auto loan. Understanding these variables can save you thousands during negotiations.
The Three Parts of a Lease Payment
Your monthly lease payment is actually the sum of three distinct components:
- Depreciation Fee: This covers the loss in value the car experiences during your lease term. It is calculated as (Adjusted Capitalized Cost – Residual Value) ÷ Term.
- Finance Fee (Rent Charge): This is the interest you pay for using the leasing company's money. It is calculated as (Adjusted Capitalized Cost + Residual Value) × Money Factor.
- Sales Tax: Most states charge sales tax on the monthly payment itself.
Key Lease Terms Defined
Gross Capitalized Cost: The "selling price" of the car. Just like buying, you should always negotiate this number down from the MSRP.
Residual Value: This is the estimated value of the car at the end of the lease. It is set by the bank and is usually a percentage of the MSRP. A higher residual value results in a lower monthly payment.
Money Factor: This is the interest rate expressed as a decimal. To find the equivalent APR, multiply the money factor by 2400 (e.g., 0.00125 × 2400 = 3% APR).
Example Calculation
If you lease a car with an MSRP of $40,000 for a negotiated price of $38,000, put $3,000 down, and have a 60% residual over 36 months:
- Adjusted Cap Cost: $38,000 – $3,000 = $35,000
- Residual Value: $40,000 × 0.60 = $24,000
- Depreciation: ($35,000 – $24,000) / 36 = $305.56
- Finance Fee: ($35,000 + $24,000) × 0.00125 = $73.75
- Base Payment: $379.31 + Tax