Car Lease Calculator
Estimate your monthly lease payment based on MSRP, money factor, and residual value.
Lease Breakdown
Understanding How Car Leases are Calculated
Leasing a car is significantly different from financing a purchase. When you lease, you are essentially paying for the depreciation of the vehicle over the time you use it, plus interest and taxes. To get the best deal, you must understand the four primary components of a lease payment.
1. Capitalized Cost (Cap Cost)
The "Cap Cost" is the negotiated price of the vehicle. Just like buying a car, you can negotiate the MSRP down. The "Gross Cap Cost" includes the price of the car plus any fees. The "Adjusted Cap Cost" is what remains after you apply your down payment or trade-in credit.
2. Residual Value
This is the estimated value of the car at the end of the lease term. It is set by the leasing company (bank) and is usually expressed as a percentage of the MSRP. For example, a 60% residual on a $40,000 car means the car is expected to be worth $24,000 after 3 years. A higher residual value leads to a lower monthly payment.
3. Money Factor
The Money Factor represents the interest rate on the lease. It is written as a small decimal (e.g., 0.00125). To convert the Money Factor into a standard APR interest rate, multiply it by 2,400. In this example, 0.00125 x 2400 = 3% APR.
4. Sales Tax
In most states, you do not pay sales tax on the full value of the car. Instead, you pay tax on the monthly lease payment itself. Our calculator applies the tax percentage to the sum of the depreciation and rent charge.
Real-World Example
Imagine you want to lease a SUV with an MSRP of $45,000. You negotiate the price to $42,000 and put down $2,000. Your adjusted cap cost is $40,000.
- Term: 36 Months
- Residual: 55% ($24,750)
- Money Factor: 0.0015 (3.6% APR)
Your monthly depreciation would be ($40,000 – $24,750) / 36 = $423.61. Your monthly rent charge would be ($40,000 + $24,750) * 0.0015 = $97.13. Totaling these and adding tax gives you your final monthly commitment.