Car Lease Payment Calculator
Estimate your monthly lease payments including interest and depreciation.
Gross Capitalized Cost:
Residual Value Amount:
Monthly Depreciation:
Monthly Rent Charge (Interest):
Base Monthly Payment:
Total Monthly Payment (Inc. Tax):
How Car Lease Payments are Calculated
Unlike a traditional car loan where you pay for the entire value of the vehicle, a lease only charges you for the portion of the car's value that you use during the lease term. This is known as the depreciation.
The math behind a lease involves three primary components:
- Depreciation Fee: The difference between the Adjusted Capitalized Cost (what you pay for the car) and the Residual Value (what the car is worth at the end), divided by the number of months.
- Rent Charge: This is essentially the interest. It is calculated using a "Money Factor." To find your Money Factor from an APR, you divide the APR by 2400.
- Sales Tax: Most states charge sales tax on the monthly payment amount, rather than the total value of the vehicle.
Example Calculation:
Vehicle MSRP: $40,000 | Term: 36 Months | Residual: 60% ($24,000)
If your negotiated price after down payment is $35,000, your total depreciation is $11,000 ($35,000 – $24,000).
Monthly Depreciation = $11,000 / 36 = $305.56.
If the APR is 4.8% (Money Factor 0.002), the Rent Charge = ($35,000 + $24,000) * 0.002 = $118.
Total Base Payment: $423.56 + Tax.
Vehicle MSRP: $40,000 | Term: 36 Months | Residual: 60% ($24,000)
If your negotiated price after down payment is $35,000, your total depreciation is $11,000 ($35,000 – $24,000).
Monthly Depreciation = $11,000 / 36 = $305.56.
If the APR is 4.8% (Money Factor 0.002), the Rent Charge = ($35,000 + $24,000) * 0.002 = $118.
Total Base Payment: $423.56 + Tax.
Key Lease Terms to Know
Residual Value: This is a fixed percentage set by the leasing company (the bank). It predicts what the car will be worth at the end of the lease. A higher residual value results in a lower monthly payment because you are paying for less depreciation.
Money Factor: This is the lease version of an interest rate. It is often written as a small decimal like 0.00125. To convert this to a standard interest rate, multiply by 2400 (0.00125 * 2400 = 3% APR).
Capitalized Cost Reduction: This is a fancy term for your down payment. While it lowers your monthly payment, most experts recommend a $0 down lease, because if the car is totaled or stolen early in the lease, that down payment money is often lost.