Auto Lease Calculator — Monthly Payment Estimator
Calculate your exact monthly car lease payment. Enter vehicle price, residual value, money factor, and lease term to see a full breakdown including depreciation, finance charge, and total lease cost.
How a Car Lease Payment Is Calculated
Monthly lease payment = Depreciation Charge + Finance Charge + Tax. The depreciation charge is the portion of the car's value you "use up." The finance charge is interest on the average of the cap cost and residual value — expressed as a money factor.
Tip: Money Factor × 2,400 = APR. A money factor of 0.0025 equals a 6% APR. Always ask dealers to disclose the money factor.
How a Car Lease Payment Is Calculated
A car lease payment has two core components: the depreciation charge and the finance charge, plus sales tax. Here is the exact formula dealers use:
- Adjusted Cap Cost = Negotiated Price − Down Payment − Trade-In + Acquisition Fee
- Monthly Depreciation = (Adjusted Cap Cost − Residual Value) ÷ Lease Term
- Monthly Finance Charge = (Adjusted Cap Cost + Residual Value) × Money Factor
- Base Monthly Payment = Depreciation + Finance Charge
- Monthly Payment with Tax = Base Payment × (1 + Tax Rate)
The key insight: you only pay for the portion of the car you use. If a $40,000 car has a 55% residual value after 36 months ($22,000), you're financing $18,000 of depreciation — not the full $40,000 you'd finance in a purchase.
Money Factor Explained
The money factor is the lease interest rate expressed as a small decimal (typically 0.0010 to 0.0050). To convert: Money Factor × 2,400 = APR. For example:
| Money Factor | Equivalent APR | Rating |
|---|---|---|
| 0.0008 | 1.9% | Excellent |
| 0.0015 | 3.6% | Good |
| 0.0020 | 4.8% | Average |
| 0.0025 | 6.0% | Fair |
| 0.0030 | 7.2% | High |
| 0.0040 | 9.6% | Very High |
Dealers are not always required to disclose the money factor. Always ask, and compare it to the APR equivalent. Some dealers mark up the money factor above the "buy rate" (the rate the manufacturer actually charges) to earn extra profit — always verify it.
Residual Value: The Most Important Lease Factor
The residual value is set by the leasing company (not negotiable) and represents how much they expect the car to be worth at the end of the lease. Higher residual = lower monthly payment because you finance less depreciation.
Vehicles with strong resale value — certain SUVs, luxury brands, and popular models — tend to have higher residuals and lease more affordably. Models with poor resale value can have surprisingly high lease payments even if the purchase price is reasonable.
Leasing vs Buying — Which Is Better?
Use our Lease vs Buy section above for your specific numbers, but here are the general guidelines:
| Factor | Leasing Better | Buying Better |
|---|---|---|
| Monthly payment | ✅ Lower payments | ❌ Higher payments |
| Long-term cost | ❌ Higher (no equity) | ✅ Lower (own asset) |
| Mileage | ❌ Limits apply | ✅ Unlimited |
| Upgrades | ✅ New car every 2–3 yrs | ❌ Same car until sold |
| Customization | ❌ Not allowed | ✅ Full freedom |
| Equity | ❌ None at end | ✅ Own the car |
| Business tax deduction | ✅ Payments may be deductible | ✅ Depreciation deductible |