Estimate your monthly lease payments including taxes and depreciation.
Gross Capitalized Cost:
Residual Value:
Monthly Depreciation:
Monthly Rent Charge:
Sales Tax (Monthly):
Estimated Monthly Payment:
function calculateLease() {
var msrp = parseFloat(document.getElementById('msrp').value) || 0;
var salesPrice = parseFloat(document.getElementById('salesPrice').value) || 0;
var downPayment = parseFloat(document.getElementById('downPayment').value) || 0;
var tradeIn = parseFloat(document.getElementById('tradeIn').value) || 0;
var term = parseFloat(document.getElementById('leaseTerm').value) || 1;
var residualPct = parseFloat(document.getElementById('residualPercent').value) || 0;
var mfInput = parseFloat(document.getElementById('moneyFactor').value) || 0;
var taxRate = parseFloat(document.getElementById('salesTax').value) || 0;
// Convert APR to Money Factor if the user entered a whole number like 3.0
var mf = mfInput;
if (mfInput > 0.5) {
mf = mfInput / 2400;
}
var adjustedCapCost = salesPrice – downPayment – tradeIn;
var residualValue = msrp * (residualPct / 100);
if (adjustedCapCost < residualValue) {
alert("The adjusted capitalized cost cannot be less than the residual value.");
return;
}
var monthlyDepreciation = (adjustedCapCost – residualValue) / term;
var monthlyRentCharge = (adjustedCapCost + residualValue) * mf;
var basePayment = monthlyDepreciation + monthlyRentCharge;
var monthlyTax = basePayment * (taxRate / 100);
var totalPayment = basePayment + monthlyTax;
document.getElementById('resCapCost').innerText = '$' + adjustedCapCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resResidual').innerText = '$' + 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('resTax').innerText = '$' + monthlyTax.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resTotal').innerText = '$' + totalPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('leaseResult').style.display = 'block';
}
How Does a Car Lease Calculation Work?
Understanding car lease math is the best way to ensure you are getting a fair deal at the dealership. Unlike a traditional auto loan, where you pay for the entire value of the vehicle plus interest, a lease only charges you for the portion of the vehicle's value that you "use up" during the term.
Key Components of a Lease
Gross Capitalized Cost: This is the negotiated price of the vehicle. Just like buying a car, you should always negotiate the "Cap Cost" rather than focusing solely on the monthly payment.
Residual Value: This is the estimated value of the car at the end of the lease. It is set by the leasing company. A higher residual value usually leads to lower monthly payments because you are financing less depreciation.
Money Factor: Think of this as the interest rate. To convert a money factor to an APR, multiply it by 2400. For example, a money factor of 0.00125 is equivalent to a 3% APR.
Depreciation: This is the difference between the Adjusted Cap Cost and the Residual Value, spread out over the months of your lease.
The Lease Formula
The monthly payment is calculated by adding three specific parts:
Depreciation Fee: (Net Cap Cost – Residual Value) ÷ Term
Sales Tax: (Depreciation + Finance Fee) × Local Tax Rate
Example Calculation
Imagine you want to lease a SUV with an MSRP of $40,000. You negotiate the price down to $38,000 and put $2,000 down. The bank sets a 60% residual ($24,000) for a 36-month term with a money factor of 0.0015.
Adding a 7% tax would bring the total to approximately $452.96 per month.
Tips for Lowering Your Payment
To get the lowest possible lease payment, aim for a vehicle with a high residual value and a low money factor. Always negotiate the sales price (Cap Cost) before mentioning that you want to lease. Additionally, avoid putting too much money down on a lease; if the car is totaled or stolen shortly after leaving the lot, that down payment is often lost, as the insurance pays the leasing company, not you.