Lease Rate Calculator

Lease Rate Calculator

Calculate your estimated monthly lease payment for a vehicle.

Understanding Your Car Lease Rate

Leasing a vehicle can be an attractive option for many drivers, offering lower monthly payments compared to financing a purchase. However, understanding the various components that make up your lease payment is crucial. This calculator helps demystify the process by estimating your monthly lease cost based on key figures.

Key Components of a Lease Payment:

• Vehicle MSRP (Manufacturer's Suggested Retail Price): This is the sticker price of the vehicle you intend to lease.
• Due at Signing: This includes your first month's payment, any acquisition fees, security deposit, taxes, and other upfront costs. While not part of the monthly calculation itself, it's essential for the total cost of getting into the lease.
• Residual Value: This is the estimated value of the car at the end of your lease term. It's usually expressed as a percentage of the MSRP. A higher residual value generally leads to a lower monthly payment. Manufacturers set these percentages based on expected depreciation.
• Lease Term (Months): This is the duration of your lease agreement, typically ranging from 24 to 48 months. The longer the term, the more time the vehicle depreciates, potentially affecting your payment.
• Money Factor: This is essentially the interest rate for your lease, expressed as a small decimal. It's often the most confusing part for consumers. To convert it to an approximate Annual Percentage Rate (APR), you multiply the money factor by 2400. For example, a money factor of 0.00125 is equivalent to an APR of 3% (0.00125 * 2400 = 3).

How the Calculator Works:

Our calculator breaks down your monthly lease payment into two main parts: the depreciation cost and the finance charge (rent charge).

1. Depreciation Cost: This is the difference between the vehicle's initial price and its residual value, spread over the lease term.
   Depreciable Amount = Vehicle MSRP – (Vehicle MSRP * Residual Value Percentage / 100)
   Monthly Depreciation = Depreciable Amount / Lease Term (Months)
2. Finance Charge (Rent Charge): This is the interest you pay on the average amount you finance over the lease.
   Average Capital Cost = (Vehicle MSRP + Residual Value) / 2
   Monthly Finance Charge = Average Capital Cost * Money Factor
3. Total Monthly Payment: The sum of the monthly depreciation and the monthly finance charge. (Note: This calculator provides a simplified estimate and does not include taxes, fees, or potential mileage charges, which will increase your actual payment.)

Example:

Let's say you're looking at a car with an MSRP of $35,000. The lease term is 36 months, the residual value is 55% of MSRP, and the money factor is 0.00125. You plan to put down $2,000 at signing.

• Depreciable Amount: $35,000 – ($35,000 * 0.55) = $35,000 – $19,250 = $15,750
• Monthly Depreciation: $15,750 / 36 months = $437.50
• Residual Value: $35,000 * 0.55 = $19,250
• Average Capital Cost: ($35,000 + $19,250) / 2 = $54,250 / 2 = $27,125
• Monthly Finance Charge: $27,125 * 0.00125 = $33.91
• Estimated Base Monthly Payment: $437.50 + $33.91 = $471.41

Remember, this is a base estimate. Your actual monthly payment will be higher once taxes, acquisition fees, and any other applicable charges are factored in.