Leasing a vehicle can be an attractive option for many drivers, offering lower monthly payments compared to financing a purchase and the ability to drive a new car every few years. However, understanding the terms and calculations involved is crucial to securing the best possible deal. This calculator helps demystify the monthly payment calculation for a car lease.
Key Components of a Lease Payment:
MSRP (Manufacturer's Suggested Retail Price): The sticker price of the vehicle.
Negotiated Price: The price you and the dealer agree upon for the vehicle. This is the starting point for calculating your lease. A lower negotiated price generally leads to a lower monthly payment.
Residual Value: The estimated value of the car at the end of the lease term. It's usually expressed as a percentage of the MSRP. Higher residual values typically result in lower monthly payments.
Money Factor: This is essentially the "interest rate" on your lease. It's a decimal number that is multiplied by 2400 to approximate an Annual Percentage Rate (APR). For example, a money factor of 0.00125 is equivalent to an APR of 3% (0.00125 * 2400 = 3%).
Lease Term: The duration of the lease agreement, typically in months.
Capitalized Cost Reduction: Any amount paid upfront that reduces the capitalized cost (negotiated price). This includes down payments, trade-in value, or rebates.
Sales Tax Rate: The tax applied to your monthly lease payment in your state or locality.
How the Monthly Payment is Calculated:
The estimated monthly lease payment is generally composed of two main parts: the depreciation cost and the finance charge (rent charge).
Adjusted Capitalized Cost: This is the negotiated price minus any capitalized cost reduction.
Adjusted Cap Cost = Negotiated Price – Capitalized Cost Reduction
Depreciation Cost Per Month: This is the difference between the Adjusted Capitalized Cost and the Residual Value, divided by the lease term.
Residual Value = MSRP * (Residual Value Percentage / 100) Depreciation Cost Per Month = (Adjusted Cap Cost – Residual Value) / Lease Term (Months)
Finance Charge (Rent Charge) Per Month: This is calculated based on the Adjusted Capitalized Cost plus the Residual Value, multiplied by the Money Factor.
Finance Charge Per Month = (Adjusted Cap Cost + Residual Value) * Money Factor
Total Monthly Payment (Before Tax): The sum of the Depreciation Cost Per Month and the Finance Charge Per Month.
Total Monthly Payment (Before Tax) = Depreciation Cost Per Month + Finance Charge Per Month
Sales Tax: The calculated sales tax is applied to the total monthly payment.
Sales Tax Amount = Total Monthly Payment (Before Tax) * (Sales Tax Rate / 100)
Final Estimated Monthly Payment: Final Monthly Payment = Total Monthly Payment (Before Tax) + Sales Tax Amount
Disclaimer: This calculator provides an estimate based on the inputs provided. Actual lease payments may vary due to additional fees (acquisition fees, disposition fees, registration, taxes on fees, etc.), dealer markups, and specific lease program terms offered by the manufacturer. Always review the final lease contract carefully.
function calculateLeasePayment() {
var msrp = parseFloat(document.getElementById("vehicleMSRP").value);
var negotiatedPrice = parseFloat(document.getElementById("negotiatedPrice").value);
var residualValuePercentage = parseFloat(document.getElementById("residualValuePercentage").value);
var moneyFactor = parseFloat(document.getElementById("moneyFactor").value);
var leaseTermMonths = parseInt(document.getElementById("leaseTermMonths").value);
var capitalizedCostReduction = parseFloat(document.getElementById("capitalizedCostReduction").value);
var salesTaxRate = parseFloat(document.getElementById("salesTaxRate").value);
var monthlyPaymentResultElement = document.getElementById("monthlyPaymentResult");
// Input validation
if (isNaN(msrp) || msrp <= 0 ||
isNaN(negotiatedPrice) || negotiatedPrice <= 0 ||
isNaN(residualValuePercentage) || residualValuePercentage 100 ||
isNaN(moneyFactor) || moneyFactor <= 0 ||
isNaN(leaseTermMonths) || leaseTermMonths <= 0 ||
isNaN(capitalizedCostReduction) || capitalizedCostReduction < 0 ||
isNaN(salesTaxRate) || salesTaxRate < 0) {
monthlyPaymentResultElement.innerText = "Invalid Input";
monthlyPaymentResultElement.style.color = "#dc3545"; // Red for error
return;
}
// Calculations
var residualValue = msrp * (residualValuePercentage / 100);
var adjustedCapitalizedCost = negotiatedPrice – capitalizedCostReduction;
// Ensure adjustedCapCost is not negative
if (adjustedCapitalizedCost adjustedCapCost, which is unusual but possible if negotiated price is very low)
if (depreciationCostPerMonth = 0) {
monthlyPaymentResultElement.innerText = "$" + finalMonthlyPayment.toFixed(2);
monthlyPaymentResultElement.style.color = "#28a745"; // Green for success
} else {
monthlyPaymentResultElement.innerText = "Error";
monthlyPaymentResultElement.style.color = "#dc3545"; // Red for error
}
}