Car Lease Calculator
Estimate your monthly car lease payments based on MSRP, money factor, and residual value.
$0.00
How Car Lease Payments are Calculated
Leasing a car is significantly different from buying one. Instead of paying for the entire value of the vehicle, you are essentially paying for the depreciation of the car over the period you use it, plus interest (known as the rent charge) and taxes.
1. The Capitalized Cost
The "Cap Cost" is essentially the price of the vehicle. To find your Net Capitalized Cost, start with the negotiated price and subtract any down payment, rebates, or trade-in equity. The lower this number, the lower your monthly payment will be.
2. Residual Value
The residual value is what the leasing company predicts the car will be worth at the end of your lease. This is usually expressed as a percentage of the original MSRP. For example, a $35,000 car with a 60% residual value will be worth $21,000 after the lease term.
3. Depreciation Fee
The depreciation fee makes up the bulk of your lease payment. The formula is:
(Net Cap Cost - Residual Value) / Lease Term
4. Rent Charge (Money Factor)
The rent charge is the interest you pay for the lease. While dealerships often use a "Money Factor," it is easily converted from APR. To find the money factor from an APR, divide the APR by 2400. The monthly rent charge formula is:
(Net Cap Cost + Residual Value) × Money Factor
Example Calculation
Suppose you lease a car with the following terms:
- MSRP: $40,000
- Negotiated Price: $38,000
- Down Payment: $2,000
- Lease Term: 36 Months
- Residual Value: 60% ($24,000)
- APR: 4.8% (Money Factor: 0.002)
In this scenario, your Net Cap Cost is $36,000 ($38k – $2k). Your monthly depreciation is ($36,000 – $24,000) / 36 = $333.33. Your monthly rent charge is ($36,000 + $24,000) * 0.002 = $120.00. Your base payment would be $453.33 plus local sales tax.
Tips for a Better Lease Deal
- Negotiate the Price: Even though it is a lease, the "Gross Capitalized Cost" is negotiable just like a purchase price.
- Check the Residual: High residual values result in lower monthly payments because the car loses less value during your term.
- Watch the Mileage: Exceeding your mileage limit can result in heavy penalties at the end of the lease, often $0.20 to $0.30 per mile.