Car Lease Payment Calculator
Enter the figures from a lease quote to see how the monthly payment is built and what the lease costs in total.
Monthly Payment (with Tax)
$477.77
Depreciation Fee per Month
$316.53
Rent Charge per Month
$129.99
Base Monthly Payment
$446.52
Tax per Month
$31.26
Adjusted Capitalized Cost
$31,695.00
Residual Value
$20,300.00
Total Rent Charge
$4,679.55
Total of Monthly Payments
$17,199.77
Total Lease Cost
$19,199.77
Money Factor
0.0025
APR Equivalent
6%
How it works
A lease payment pays for two things: the part of the car's value you use up, and a finance charge for the money tied up in the car. The first is the depreciation fee: the adjusted capitalized cost (the negotiated price plus any fees rolled in, less cash down, trade-in equity and rebates) minus the residual value, spread evenly over the months of the lease.
The second is the rent charge. Lessors quote it as a money factor, and the monthly rent charge is the money factor times the sum of the adjusted capitalized cost and the residual. That sum, times the money factor, is the same as charging the APR equivalent (money factor × 2,400) on the average of the two amounts, which is roughly the average balance over the lease.
The calculator applies your sales tax rate to each monthly payment; how leases are taxed varies by state. Total lease cost is what you hand over: the cash down, any trade-in equity applied, and every monthly payment. Rebates are not counted as your money.
Formula
adjusted cap cost = price + capitalized fees − cash down − trade-in equity − rebates residual = MSRP × residual % money factor = APR ÷ 2,400 (APR equivalent = money factor × 2,400) depreciation fee = (adjusted cap cost − residual) ÷ months rent charge = (adjusted cap cost + residual) × money factor monthly payment = (depreciation fee + rent charge) × (1 + sales tax rate) total lease cost = cash down + trade-in equity + monthly payment × months
Example
A car with a $35,000 MSRP negotiated to $33,000, with a $695 acquisition fee rolled in and $2,000 cash down, has an adjusted capitalized cost of $31,695. At a 58% residual the car is expected to be worth $20,300 after 36 months.
The depreciation fee is ($31,695 − $20,300) ÷ 36 = $316.53 a month. With a money factor of 0.0025 (6% APR equivalent) the rent charge is ($31,695 + $20,300) × 0.0025 = $129.99. The base payment is $446.52; 7% tax adds $31.26, for $477.77 a month. Over 36 months that is $17,199.77 in payments and a total lease cost of $19,199.77 with the cash down.
Assumptions and limitations
- The money-factor method is the convention lessors use to quote the rent charge; it approximates, but is not identical to, interest on a declining balance. Your contract's disclosed rent charge and payment govern.
- Sales tax is applied to the monthly payment only. Some states tax the full price or the cap-cost reduction up front instead; enter the rate that applies to your payment, or 0 and add the tax yourself.
- Fees paid at signing (first payment, registration, security deposit) and the disposition fee at lease end are not in the total. Excess-mileage and wear charges are not included.
- The residual percent, money factor and fees are inputs you enter from a quote; the defaults are illustrative, not current market rates.
- This is an estimate, not financial advice.
Frequently asked questions
How do I convert a money factor to an interest rate?
Multiply the money factor by 2,400. A money factor of 0.0030 is a 7.2% APR equivalent, and a 6% APR equivalent is a money factor of 0.0025.
Why does a higher residual lower the payment?
The depreciation fee covers only the value between the adjusted capitalized cost and the residual. A higher residual leaves less depreciation to pay for. It raises the rent charge slightly, because the residual is part of the amount the money factor applies to, but the depreciation saving is larger.
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