Car Lease Payment Calculator
Estimate your monthly lease payment using the "Money Factor" method used by dealerships.
Estimated Monthly Payment
How is a Car Lease Payment Calculated?
Leasing a vehicle is different from a traditional loan because you are only paying for the vehicle's depreciation during the time you drive it, plus interest and taxes. To get an accurate estimate, you need to understand three core components: the Net Capitalized Cost, the Residual Value, and the Money Factor.
1. Depreciation Fee
This is the primary part of your payment. It covers the loss in the car's value over the lease term. The formula is:
(Net Capitalized Cost – Residual Value) / Term in Months
2. The Money Factor (Finance Fee)
The "Money Factor" is the lease version of an interest rate. Dealerships express this as a small decimal (e.g., 0.00125). To find the equivalent APR, multiply the money factor by 2,400. The rent charge is calculated by adding the capitalized cost to the residual value and multiplying by the money factor.
3. 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 results in a lower monthly payment because you are responsible for less depreciation.
Example Lease Calculation
Imagine you are leasing a car with the following terms:
- Selling Price: $40,000
- Down Payment: $4,000 (Net Cap Cost: $36,000)
- Residual Value: 60% ($24,000)
- Lease Term: 36 Months
- Money Factor: 0.0015 (3.6% APR)
In this scenario, your monthly depreciation would be $333.33 ($12,000 / 36), and your finance fee would be $90.00 (($36,000 + $24,000) * 0.0015), totaling $423.33 before taxes.
Leasing Tips to Lower Your Payment
- Negotiate the Selling Price: Most people don't realize that the "Cap Cost" is negotiable, just like a purchase price.
- Check for Rebates: Look for manufacturer "lease cash" or loyalty incentives.
- Mind the Mileage: Higher mileage limits (like 15,000 miles/year) lower the residual value and increase your payment.