Car Lease Calculator

How to Calculate a Car Lease Payment

A lease payment has two main components: the depreciation charge (paying for how much value the car loses during your lease) and the finance charge (the cost of borrowing, similar to interest on a loan).

Lease Terminology

Term	Definition
MSRP	Manufacturer's Suggested Retail Price (sticker price)
Capitalized Cost	Negotiated price minus any down payment or trade-in
Residual Value	Predicted value at lease end (% of MSRP, set by the manufacturer)
Money Factor	Lease interest rate expressed as a decimal (multiply by 2,400 to get APR equivalent)
Cap Cost Reduction	Down payment + trade-in that reduces the capitalized cost

The Lease Payment Formula

Worked Example

$40,000 MSRP, negotiated to $38,000, $3,000 down, 55% residual, 0.0025 money factor, 36 months, 7% tax:

• Cap cost: $38,000 − $3,000 = $35,000
• Residual: $40,000 × 55% = $22,000
• Depreciation: ($35,000 − $22,000) / 36 = $361/mo
• Finance: ($35,000 + $22,000) × 0.0025 = $143/mo
• Pre-tax: $504/mo
• Monthly with 7% tax: $539/mo

Tips for Getting the Best Lease Deal

• Negotiate the capitalized cost — just like buying, you can negotiate the price
• Look for high-residual vehicles — Honda, Toyota, and Lexus hold value best
• Shop for low money factors — manufacturer-subsidized leases often offer 0.0010–0.0015
• Match your mileage — excess mileage fees are $0.15–$0.25 per mile
• Avoid excessive down payment — if the car is totaled, you lose your down payment (unlike a loan)