Car Lease Calculator
Estimate your monthly car lease payments based on MSRP, money factor, and residual value.
Net Capitalized Cost:
$0.00
Residual Value:
$0.00
Monthly Depreciation:
$0.00
Monthly Rent Charge:
$0.00
Monthly Sales Tax:
$0.00
Total Monthly Payment:
$0.00
Understanding How Car Lease Payments Are Calculated
Leasing a vehicle can be more complex than a traditional auto loan. Instead of paying for the entire value of the car, you are essentially paying for the depreciation of the vehicle over the time you drive it, plus interest and taxes.
Key Terms You Need to Know
- MSRP: The Manufacturer's Suggested Retail Price. This is the starting point for negotiations.
- Gross Capitalized Cost: The negotiated price of the vehicle plus any added fees or taxes rolled into the lease.
- Capitalized Cost Reduction: This includes your down payment, trade-in value, and any manufacturer rebates that reduce the amount being financed.
- Residual Value: The estimated value of the car at the end of the lease. A higher residual value usually results in a lower monthly payment because you are paying for less depreciation.
- Money Factor: This represents the interest rate on the lease. To convert a money factor to an APR (Annual Percentage Rate), multiply it by 2,400.
The Car Lease Formula
The monthly payment is comprised of three main parts:
- Depreciation Fee: (Net Cap Cost – Residual Value) / Lease Term
- Rent Charge (Interest): (Net Cap Cost + Residual Value) × Money Factor
- Sales Tax: (Depreciation Fee + Rent Charge) × Tax Rate
Example Calculation
Imagine you are leasing a car with a negotiated price of $30,000. You put $2,000 down, leaving a Net Cap Cost of $28,000. The bank says the residual value is 60% ($18,000) after 36 months, and the money factor is 0.0015.
- Depreciation: ($28,000 – $18,000) / 36 = $277.78
- Rent Charge: ($28,000 + $18,000) × 0.0015 = $69.00
- Pre-tax Total: $277.78 + $69.00 = $346.78
With a 7% tax rate, your final payment would be approximately $371.05 per month.