Car Lease Price Calculator

Vehicle MSRP ($):

Negotiated Price / Capitalized Cost ($):

Residual Value (% of MSRP):

Lease Term (Months):

Money Factor (e.g., 0.00180):

Capitalized Cost Reduction ($):

Trade-in Value ($):

Sales Tax Rate (%):

Acquisition Fee ($):

Documentation Fee ($):

Lease Summary:

Estimated Monthly Payment:

Total Depreciation Cost:

Total Finance Charges:

Total Due at Signing:

Understanding Your Car Lease: A Comprehensive Guide

Leasing a car can be an attractive option for many drivers, offering lower monthly payments compared to buying and the flexibility to drive a new vehicle every few years. However, the terms and calculations involved in a car lease can often seem complex. Our Car Lease Price Calculator is designed to demystify these figures, helping you understand exactly what you'll pay and why.

What is a Car Lease?

A car lease is essentially a long-term rental agreement. Instead of buying the car outright, you pay for the depreciation of the vehicle during the time you drive it, plus a finance charge (often called a "rent charge") and various fees. At the end of the lease term, you typically return the car to the dealership or have the option to purchase it for its residual value.

Key Components of a Car Lease

To understand your lease payment, it's crucial to know the following terms:

Vehicle MSRP (Manufacturer's Suggested Retail Price): This is the sticker price of the car. While it's a starting point, your lease is often based on a negotiated price.
Negotiated Price / Capitalized Cost: This is the agreed-upon selling price of the vehicle, similar to the purchase price if you were buying. It's the basis for calculating depreciation. A lower capitalized cost means lower monthly payments.
Residual Value: This is the estimated value of the car at the end of the lease term, expressed as a percentage of the MSRP. The higher the residual value, the less the car is expected to depreciate, which generally leads to lower monthly payments.
Lease Term (Months): The duration of your lease agreement, typically 24, 36, or 48 months.
Money Factor: This is the lease equivalent of an interest rate. It's a small decimal number (e.g., 0.00180) that represents the finance charge you pay on the lease. To convert it to an approximate annual percentage rate (APR), multiply it by 2400 (0.00180 * 2400 = 4.32% APR).
Capitalized Cost Reduction: This is an upfront payment you make to reduce the capitalized cost of the vehicle. It's similar to a down payment when buying and will lower your monthly lease payments.
Trade-in Value: If you trade in your old vehicle, its value can also be applied as a capitalized cost reduction, further lowering your lease payments.
Sales Tax Rate: Sales tax is typically applied to your monthly payment in most states, though some states tax the total capitalized cost upfront. Our calculator applies it to the monthly payment.
Acquisition Fee: A fee charged by the leasing company for setting up the lease.
Documentation Fee: A fee charged by the dealership for processing paperwork.

How Our Car Lease Price Calculator Works

Our calculator uses the standard lease formula to estimate your monthly payments and total costs. Here's a breakdown of the steps:

Adjusted Capitalized Cost: We start with your Negotiated Price and subtract any Capitalized Cost Reduction and Trade-in Value. This is the actual amount being financed.
Residual Value in Dollars: The Vehicle MSRP is multiplied by the Residual Value Percentage to determine the car's estimated value at lease end.
Depreciation Amount: This is the core of your lease payment. It's calculated by subtracting the Residual Value (in dollars) from the Adjusted Capitalized Cost. This is the total amount the car is expected to lose in value during your lease.
Monthly Depreciation: The Depreciation Amount is divided by the Lease Term (in months) to get the monthly cost of the car's value loss.
Finance Charge (Rent Charge): This is calculated by adding the Adjusted Capitalized Cost and the Residual Value, then multiplying by the Money Factor. This represents the cost of borrowing the money for the lease.
Base Monthly Payment: This is the sum of the Monthly Depreciation and the Monthly Finance Charge.
Monthly Sales Tax: The Base Monthly Payment is multiplied by your Sales Tax Rate.
Total Monthly Payment: The Base Monthly Payment plus the Monthly Sales Tax.
Total Due at Signing: This includes your Capitalized Cost Reduction, Acquisition Fee, Documentation Fee, and your first Total Monthly Payment.
Total Depreciation Cost: The total amount you pay for the car's depreciation over the entire lease term.
Total Finance Charges: The total amount you pay in finance charges over the entire lease term.

Example Calculation:

Let's use the default values in the calculator:

Vehicle MSRP: $35,000
Negotiated Price / Capitalized Cost: $32,000
Residual Value (%): 55%
Lease Term: 36 Months
Money Factor: 0.00180
Capitalized Cost Reduction: $1,000
Trade-in Value: $0
Sales Tax Rate: 7%
Acquisition Fee: $595
Documentation Fee: $150

Based on these inputs, the calculator would determine:

Adjusted Capitalized Cost: $32,000 – $1,000 – $0 = $31,000
Residual Value ($): $35,000 * 0.55 = $19,250
Depreciation Amount: $31,000 – $19,250 = $11,750
Monthly Depreciation: $11,750 / 36 = $326.39
Finance Charge: ($31,000 + $19,250) * 0.00180 = $90.45
Base Monthly Payment: $326.39 + $90.45 = $416.84
Monthly Sales Tax: $416.84 * 0.07 = $29.18
Estimated Monthly Payment: $416.84 + $29.18 = $446.02
Total Due at Signing: $1,000 (Cap Cost Reduction) + $595 (Acq Fee) + $150 (Doc Fee) + $446.02 (First Payment) = $2,191.02
Total Depreciation Cost: $326.39 * 36 = $11,750.04
Total Finance Charges: $90.45 * 36 = $3,256.20

Factors to Consider When Leasing

Mileage Limits: Leases come with annual mileage restrictions (e.g., 10,000, 12,000, or 15,000 miles per year). Exceeding these limits can result in significant per-mile penalties.
Wear and Tear: You are responsible for maintaining the vehicle and returning it in good condition. Excessive wear and tear can lead to additional charges at lease end.
Early Termination: Breaking a lease early can be very expensive, often requiring you to pay the remaining payments and other fees.
Insurance Requirements: Leasing companies typically require higher insurance coverage than if you owned the car outright.
End-of-Lease Options: At the end of the term, you can usually return the car, purchase it for the residual value, or lease a new vehicle.

By using this calculator and understanding the terms, you can make a more informed decision about whether leasing is the right choice for your automotive needs.