Calculate your exact monthly lease payment, including taxes and interest fees.
Monthly Base Payment:
Monthly Tax:
Total Monthly Payment:
Residual Value Amount:
Total Rent Charge (Interest):
How to Calculate a Car Lease
Understanding car lease math is the best way to ensure you are getting a fair deal at the dealership. Unlike a traditional auto loan, where you pay for the entire value of the vehicle plus interest, a lease only charges you for the depreciation of the car during the time you drive it.
The Three Pillars of Lease Math
Depreciation Fee: This is the value the car loses while you own it. It is calculated as: (Adjusted Capital Cost – Residual Value) / Lease Term.
Finance Fee (Money Factor): This is essentially the interest rate for the lease. It is calculated as: (Adjusted Capital Cost + Residual Value) × Money Factor.
Sales Tax: Most states charge sales tax on the monthly payment rather than the total price of the vehicle.
Realistic Example:
MSRP: $40,000
Agreed Price: $37,000
Residual (60%): $24,000
Term: 36 Months
Money Factor: 0.0020 (Approx 4.8% APR)
In this scenario, you are paying for $13,000 of depreciation ($37k – $24k) over 3 years, which is about $361/month before interest and taxes are applied.
Understanding the "Money Factor"
The Money Factor is often presented as a small decimal like 0.0025. To convert this to a familiar Annual Percentage Rate (APR), simply multiply the Money Factor by 2,400. For instance, a money factor of 0.0025 equals a 6% interest rate (0.0025 × 2400 = 6).
What is Residual Value?
The Residual Value is what the leasing company predicts the car will be worth at the end of your lease. A higher residual value is better for the consumer because it means the car depreciates less, resulting in lower monthly payments.
Tips for Negotiating Your Lease
Negotiate the Sale Price: Don't just accept the MSRP. The lower the sales price, the lower your monthly depreciation fee.
Check the Money Factor: Dealerships sometimes "mark up" the money factor set by the manufacturer's captive lender. Ask for the "buy rate."
Minimize Down Payments: If the car is totaled or stolen shortly after you leave the lot, your down payment is usually lost forever as the insurance payout goes to the leasing company.
function calculateCarLease() {
var msrp = parseFloat(document.getElementById("msrp").value);
var salesPrice = parseFloat(document.getElementById("salesPrice").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var tradeIn = parseFloat(document.getElementById("tradeIn").value);
var term = parseFloat(document.getElementById("leaseTerm").value);
var residualPercent = parseFloat(document.getElementById("residualPercent").value);
var moneyFactor = parseFloat(document.getElementById("moneyFactor").value);
var salesTaxRate = parseFloat(document.getElementById("salesTax").value);
if (isNaN(msrp) || isNaN(salesPrice) || isNaN(term) || term <= 0) {
alert("Please enter valid numeric values for MSRP, Sales Price, and Term.");
return;
}
// 1. Calculate Gross Cap Cost
// In this simple model, we assume salesPrice is the Cap Cost.
var capCost = salesPrice – downPayment – tradeIn;
// 2. Calculate Residual Value in Dollars
var residualValue = msrp * (residualPercent / 100);
// 3. Monthly Depreciation Fee
var depreciationFee = (capCost – residualValue) / term;
if (depreciationFee < 0) depreciationFee = 0;
// 4. Monthly Rent Charge (Interest)
// Formula: (Cap Cost + Residual Value) * Money Factor
var rentCharge = (capCost + residualValue) * moneyFactor;
// 5. Monthly Base Payment
var basePayment = depreciationFee + rentCharge;
// 6. Tax
var monthlyTax = basePayment * (salesTaxRate / 100);
// 7. Total Payment
var totalPayment = basePayment + monthlyTax;
// 8. Total Rent Charges over whole term
var totalRent = rentCharge * term;
// Formatting outputs
document.getElementById("resBase").innerText = "$" + basePayment.toFixed(2);
document.getElementById("resTax").innerText = "$" + monthlyTax.toFixed(2);
document.getElementById("resTotal").innerText = "$" + totalPayment.toFixed(2);
document.getElementById("resDollar").innerText = "$" + residualValue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resInterest").innerText = "$" + totalRent.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
// Display the result box
document.getElementById("leaseResult").style.display = "block";
}