Estimate your monthly car lease payments based on MSRP, residual value, and money factor.
Gross Capitalized Cost:
Residual Value:
Monthly Depreciation:
Monthly Rent Charge:
Estimated Monthly Payment:
Understanding How Car Lease Payments Are Calculated
Leasing a vehicle is significantly different from traditional financing. Instead of paying for the entire value of the car, you are essentially paying for the depreciation of the vehicle during the time you drive it, plus interest (known as the money factor).
Key Terms You Need to Know
MSRP: The Manufacturer's Suggested Retail Price. The residual value is almost always calculated as a percentage of this number.
Capitalized Cost: This is the "sales price" of the car. Just like buying, you can often negotiate this lower than the MSRP.
Residual Value: The estimated value of the car at the end of the lease. A higher residual value results in a lower monthly payment because you are responsible for less depreciation.
Money Factor: This is the lease version of an APR. To convert Money Factor to APR, multiply it by 2400 (e.g., 0.00125 * 2400 = 3%).
Lease Calculation Example
Suppose you are looking at a car with an MSRP of $40,000 and a 36-month lease:
Variable
Example Value
Negotiated Price
$37,000
Down Payment
$2,000
Residual Value (60%)
$24,000
Money Factor
0.0015 (3.6% APR)
In this scenario, the Monthly Depreciation is ($35,000 Adjusted Cap Cost – $24,000 Residual) / 36 months = $305.55. The Rent Charge is ($35,000 + $24,000) * 0.0015 = $88.50. Adding these together (plus tax) gives you your final payment.
Is Leasing Right For You?
Leasing is ideal for drivers who want a new car every 3 years, prefer lower monthly payments, and drive a predictable number of miles annually. However, if you plan to keep the car long-term or drive more than 15,000 miles a year, traditional financing may be more cost-effective.
function calculateCarLease() {
var msrp = parseFloat(document.getElementById('msrp').value);
var salesPrice = parseFloat(document.getElementById('salesPrice').value);
var downPayment = parseFloat(document.getElementById('downPayment').value);
var tradeIn = parseFloat(document.getElementById('tradeIn').value);
var leaseTerm = parseFloat(document.getElementById('leaseTerm').value);
var residualPercent = parseFloat(document.getElementById('residualPercent').value);
var moneyFactor = parseFloat(document.getElementById('moneyFactor').value);
var salesTax = parseFloat(document.getElementById('salesTax').value);
if (isNaN(msrp) || isNaN(salesPrice) || isNaN(leaseTerm) || leaseTerm <= 0) {
alert("Please enter valid numeric values for price and term.");
return;
}
// 1. Adjusted Capitalized Cost
var adjCapCost = salesPrice – downPayment – tradeIn;
// 2. Residual Value
var residualValue = msrp * (residualPercent / 100);
// 3. Monthly Depreciation
var monthlyDepreciation = (adjCapCost – residualValue) / leaseTerm;
if (monthlyDepreciation < 0) monthlyDepreciation = 0;
// 4. Monthly Rent Charge (Interest)
// Formula: (Adj Cap Cost + Residual) * Money Factor
var monthlyRentCharge = (adjCapCost + residualValue) * moneyFactor;
// 5. Base Monthly Payment
var basePayment = monthlyDepreciation + monthlyRentCharge;
// 6. Total Payment with Tax
var taxAmount = basePayment * (salesTax / 100);
var totalMonthlyPayment = basePayment + taxAmount;
// Display Results
document.getElementById('leaseResult').style.display = 'block';
document.getElementById('resGrossCap').innerText = '$' + adjCapCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resResidual').innerText = '$' + residualValue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resDepreciation').innerText = '$' + monthlyDepreciation.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resRent').innerText = '$' + monthlyRentCharge.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resTotal').innerText = '$' + totalMonthlyPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}