Car Lease Monthly Payment Calculator
Estimate your monthly car lease payments by entering the vehicle details below.
Gross Capitalized Cost:
$0.00
Residual Value:
$0.00
Monthly Depreciation:
$0.00
Monthly Rent Charge (Interest):
$0.00
Monthly Sales Tax:
$0.00
Estimated Monthly Payment:
$0.00
Understanding How Car Lease Payments Are Calculated
Leasing a car is often more complex than buying one because the payment isn't just based on the total price. Instead, you are essentially paying for the depreciation of the vehicle over the time you drive it, plus interest and fees.
Key Components of a Lease Payment
- MSRP: The Manufacturer's Suggested Retail Price. This is the starting point for the car's value.
- Negotiated Sales Price (Capitalized Cost): This is the price you actually agree to pay for the car. Just like buying, you can and should negotiate this number.
- Residual Value: This is what the leasing company predicts the car will be worth at the end of your lease. It is usually expressed as a percentage of the MSRP. A higher residual value means lower monthly payments.
- Money Factor: This is the interest rate on a lease. To convert a Money Factor to a standard APR, multiply it by 2400. To convert APR to Money Factor, divide by 2400.
- Down Payment (Cap Cost Reduction): Money you pay upfront to reduce the "capitalized cost," which in turn lowers your monthly payment.
The Car Lease Formula
The math behind your lease happens in three main steps:
- Depreciation Fee: (Adjusted Cap Cost – Residual Value) ÷ Term in Months.
- Rent Charge (Interest): (Adjusted Cap Cost + Residual Value) × Money Factor.
- Taxes: Most states apply sales tax to the monthly payment.
Example Calculation
Imagine a car with an MSRP of $40,000. You negotiate the price down to $38,000. You put $2,000 down. The 36-month residual value is 60% ($24,000), and the APR is 4.8% (Money Factor of 0.0020).
- Adjusted Cap Cost: $38,000 – $2,000 = $36,000
- Monthly Depreciation: ($36,000 – $24,000) / 36 = $333.33
- Monthly Rent: ($36,000 + $24,000) * 0.0020 = $120.00
- Base Payment: $333.33 + $120.00 = $453.33
Tips for Getting a Better Lease Deal
To lower your monthly payment, focus on these three levers:
1. Negotiate the Sales Price: Don't just accept the MSRP. The lower the sales price, the lower the depreciation you have to pay for.
2. Check for Incentives: Manufacturers often offer "lease cash" or rebates that act as an additional down payment.
3. Watch the Money Factor: If you have excellent credit, ensure the dealership isn't "marking up" the interest rate provided by the bank.