Calculate your estimated monthly car lease payment accurately including taxes and money factor.
Gross Capitalized Cost:
Residual Value:
Monthly Depreciation:
Monthly Rent Charge:
Base Monthly Payment:
Total Monthly Payment (w/ Tax):
Understanding How Car Lease Payments Are Calculated
Leasing a vehicle can be more complex than a standard purchase because you aren't paying for the entire car; you are paying for the depreciation that occurs during the time you drive it, plus interest and taxes.
The Core Components of a Lease
MSRP: The Manufacturer's Suggested Retail Price. This is the starting point for calculating the residual value.
Negotiated Price (Sales Price): The actual price you and the dealer agree upon. Just like buying, you can often negotiate the price of a leased car.
Residual Value: The estimated value of the car at the end of the lease. This is set by the leasing company. A higher residual value usually means lower monthly payments.
Money Factor: This is essentially the interest rate for the lease. To convert it to a standard APR, multiply the money factor by 2,400.
Capitalized Cost Reductions: This includes your down payment, trade-in value, and any rebates that lower the total amount financed.
The Math Behind the Payment
The calculation happens in three main steps:
Depreciation Fee: (Adjusted Cap Cost – Residual Value) ÷ Term. This covers the value the car loses while you have it.
Finance Fee (Rent Charge): (Adjusted Cap Cost + Residual Value) × Money Factor. This is the cost of borrowing the money.
Sales Tax: Most states apply sales tax to the monthly payment.
Example Calculation
If you lease a car with a $30,000 MSRP, a $28,000 negotiated price, a 60% residual ($18,000), and a 36-month term with a .00125 money factor: