Professional Lease Rates Calculator
Calculate monthly lease payments using Capitalized Cost, Residual Value, and Money Factor.
Understanding Vehicle Lease Rates
Leasing a vehicle is fundamentally different from purchasing one through a traditional loan. Instead of paying for the entire value of the asset, you are paying for the depreciation that occurs during your period of use, plus a financing fee known as the Money Factor.
The Core Components of a Lease
To use the lease rates calculator effectively, you must understand the four primary variables that dictate your monthly expenditure:
- Gross Capitalized Cost: The agreed-upon price of the vehicle, including any dealer add-ons, acquisition fees, or prior credit balances.
- Residual Value: This is the estimated value of the car at the end of the lease term. It is usually expressed as a percentage of the MSRP. A higher residual value results in lower monthly payments because the car depreciates less.
- Money Factor: This is the lease equivalent of an interest rate. To convert a Money Factor to a standard APR, multiply it by 2400. For example, a Money Factor of 0.0015 is roughly equal to a 3.6% APR.
- Cap Cost Reduction: Any amount paid upfront, such as a cash down payment or a trade-in, that reduces the amount being financed.
How the Calculation Works
The lease rate is comprised of two main parts: the Depreciation Fee and the Finance Fee.
1. Depreciation Fee: (Adjusted Cap Cost – Residual Value) / Lease Term. This covers the value the car loses while you drive it.
2. Finance Fee (Rent Charge): (Adjusted Cap Cost + Residual Value) × Money Factor. This is the cost for the leasing company to carry the asset for you.
The sum of these two figures, plus applicable local sales tax, equals your total monthly obligation.
Example Calculation
Suppose you lease a vehicle with a $40,000 MSRP. The dealer agrees to a price of $38,000. You put $2,000 down. The 36-month residual is 60% ($24,000), and the Money Factor is 0.00125.
- Adjusted Cap Cost: $38,000 – $2,000 = $36,000
- Monthly Depreciation: ($36,000 – $24,000) / 36 = $333.33
- Monthly Finance Fee: ($36,000 + $24,000) * 0.00125 = $75.00
- Base Payment: $333.33 + $75.00 = $408.33
If your local tax rate is 8%, your final monthly payment would be approximately $441.00.