Auto Lease Calculator
Calculate monthly car lease payments and compare to buying.
The Auto Lease Calculator breaks down your monthly lease payment into depreciation and finance charges, showing the true cost of leasing versus buying. Enter your negotiated price, residual value, money factor, and lease term to understand the financial comparison and decide if leasing fits your driving patterns and budget.
Examples
36-Month Sedan Lease
Frequently Asked Questions
What is a money factor?
What is residual value?
Should I lease or buy?
Quick Tips
- •Negotiate the capitalized cost (negotiated price) aggressively—this directly reduces your monthly payment. Treat it like buying a car.
- •Understand your mileage limit. If you drive more than 12,000 miles/year, buying may be cheaper despite higher monthly payments.
- •A lease makes sense if you want a new car every few years, prefer predictable costs (no major repairs), and stay within mileage limits.
- •Maintain the vehicle religiously. Follow the recommended service schedule to avoid excess wear charges at lease end.
- •Consider gap insurance (usually included in leases) which covers the difference between the car's value and your lease obligation if totaled.
The Auto Lease Calculator breaks down your monthly lease payment into depreciation and finance charges, showing the true cost of leasing versus buying. Enter your negotiated price, residual value, money factor, and lease term to understand the financial comparison and decide if leasing fits your driving patterns and budget.
How to Use This Calculator
Enter the MSRP and your negotiated price, the residual value percentage, money factor, lease term, down payment, and tax rate. The calculator breaks down your monthly payment into depreciation and finance charges, and compares leasing versus buying the same vehicle.
Understanding the Formula
Monthly Depreciation = (Net Cap Cost - Residual) / Term. Monthly Finance Charge = (Net Cap Cost + Residual) x Money Factor. Monthly Payment = Depreciation + Finance Charge + Tax. Equivalent APR = Money Factor x 2400.
Examples
36-Month Sedan Lease
A $40,000 car negotiated to $38,000 with 55% residual, 0.00125 money factor, $2,000 down, 36 months. Monthly depreciation: $389, finance charge: $60, plus 7% tax for a total of about $480/month.
Frequently Asked Questions
What is a money factor?
The money factor is the lease equivalent of an interest rate. Multiply it by 2,400 to get the approximate APR. A money factor of 0.00125 equals about 3% APR. Lower money factors mean less financing cost.
What is residual value?
Residual value is what the leasing company estimates the car will be worth at the end of the lease. Higher residuals result in lower monthly payments because you are paying for less depreciation.
Should I lease or buy?
Leasing offers lower monthly payments and a new car every few years, but you never build equity. Buying costs more monthly but you own the vehicle outright. Leasing may be better if you drive under the mileage limit and prefer newer vehicles.
Assumptions & Limitations
- Residual value is the leasing company estimate; actual residual values may differ based on market conditions and vehicle wear.
- Money factor (cap reduction fee) remains constant for the entire lease term; early termination may incur penalties.
- Sales tax is applied uniformly to the monthly payment; actual tax treatment varies by state and lease structure.
- Mileage allowance is typically 12,000 miles per year; exceeding mileage limits incurs excess mileage charges ($0.15-$0.30 per mile).
- Wear and tear is assumed to be normal; significant damage or unusual wear may result in excess wear charges at lease end.