Car Lease Monthly Payment Calculator
Adjusted Capitalized Cost: $0.00
Residual Value: $0.00
Monthly Depreciation: $0.00
Monthly Rent Charge: $0.00
Total Monthly Payment: $0.00
Understanding Your Car Lease Calculation
Leasing a vehicle can be more complex than a standard car loan. Instead of paying for the entire value of the car, you are essentially paying for the depreciation that occurs during the time you drive it, plus interest and taxes.
Key Components of a Lease
- Gross Capitalized Cost: The agreed-upon price of the vehicle, including any dealer fees or add-ons.
- 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 leads to lower monthly payments.
- Money Factor: This is the interest rate on a lease. To convert the Money Factor to a standard APR (Annual Percentage Rate), multiply it by 2,400. For example, a money factor of 0.0025 equals a 6% APR.
- Cap Cost Reductions: These are items like your down payment, trade-in value, or manufacturer rebates that lower the amount being financed.
Real-World Example
Imagine you are leasing a car with an MSRP of $40,000 for 36 months. The dealer offers a residual value of 55% ($22,000) and a money factor of 0.0020 (4.8% APR). You provide a $4,000 down payment.
Your adjusted capitalized cost is $36,000. Over 36 months, the car loses $14,000 in value ($36,000 – $22,000), resulting in a monthly depreciation of $388.89. The rent charge (interest) would be approximately $116.00 per month. Adding these together (plus tax) gives you your final monthly commitment.
How to Get the Best Lease Deal
To lower your payment, focus on negotiating the Gross Capitalized Cost (the sales price) rather than just the monthly payment. Additionally, check for "Manufacturer Specials" where the money factor is subsidized to be extremely low, often called "subvented" rates.