Gross Capitalized Cost: $'+capCost.toFixed(2)+'
'+'Residual Value: $'+resValue.toFixed(2)+'
'+'Monthly Depreciation: $'+depreciation.toFixed(2)+'
'+'Monthly Rent Charge: $'+rentCharge.toFixed(2)+'
'+'Monthly Sales Tax: $'+taxAmount.toFixed(2)+'
';}else{breakdownDiv.style.display='none';}}Using the Auto Lease Calculator
Choosing to lease a vehicle can be a complex financial decision. Our auto lease calculator is designed to simplify this process by breaking down the components of a lease payment. Unlike a standard car loan, a lease only charges you for the portion of the car\'s value that you actually use during the term.
By entering key data points like the MSRP, money factor (interest rate), and residual value, you can estimate your monthly expenditure and compare different dealership offers accurately.
- Vehicle Price (MSRP)
- The Manufacturer\'s Suggested Retail Price of the car before any negotiations or discounts.
- Down Payment & Trade-in
- The amount of cash you pay upfront or the value of your old vehicle, which reduces the "Capitalized Cost."
- Residual Value
- The estimated value of the car at the end of the lease term, usually expressed as a percentage of the MSRP.
- Money Factor / APR
- The interest rate applied to the lease. To convert APR to a money factor, divide by 2,400.
How It Works: The Lease Formula
Automobile leasing calculations consist of three main parts: Depreciation, Rent Charge, and Taxes. The auto lease calculator uses the following mathematical steps:
Step 1: Monthly Depreciation = (Net Cap Cost – Residual Value) / Term
Step 2: Monthly Rent Charge = (Net Cap Cost + Residual Value) × Money Factor
Step 3: Total Monthly Payment = (Depreciation + Rent) × (1 + Tax Rate)
- Net Cap Cost: This is the negotiated price of the car minus any down payments or credits.
- Money Factor: Dealers often use this instead of APR. For example, an APR of 4.8% equals a money factor of 0.0020.
- Term: The length of the lease, typically 24, 36, or 48 months.
Calculation Example
Scenario: You are looking at a car with an MSRP of $40,000. You negotiate the price to $38,000 and provide a $3,000 down payment. The lease term is 36 months, the residual value is 55%, and the APR is 6% with a 10% tax rate.
Step-by-step solution:
- Net Cap Cost: $38,000 – $3,000 = $35,000
- Residual Value: $40,000 × 0.55 = $22,000
- Monthly Depreciation: ($35,000 – $22,000) / 36 = $361.11
- Money Factor: 6 / 2400 = 0.0025
- Monthly Rent Charge: ($35,000 + $22,000) × 0.0025 = $142.50
- Base Payment: $361.11 + $142.50 = $503.61
- Total with 10% Tax: $503.61 × 1.10 = $553.97
Common Questions
What is a good money factor?
A "good" money factor varies with the current economic climate and your credit score. Generally, anything equivalent to a prime interest rate is considered excellent. Always multiply the money factor by 2,400 to see the equivalent APR to compare it with traditional car loans.
Should I put money down on a lease?
Most financial experts suggest putting as little money down as possible on a lease. Since you do not own the asset, if the car is totaled or stolen early in the lease, your down payment is often lost, as insurance pays the leasing company the remaining value of the car, not your equity.
Can I negotiate the residual value?
No, the residual value is typically set by the bank or the manufacturer's captive finance arm (e.g., Ford Credit or Toyota Financial Services) and is not negotiable at the dealership level. However, you can negotiate the gross capitalized cost (the car price).