Free Car Lease Calculator
Use this car lease calculator to estimate your monthly lease payment and see how much of it is depreciation, finance charge and tax.
The car lease payment formula
- Adjusted cap cost = negotiated price + fees − down payment − trade-in equity.
- Residual value = MSRP × residual %.
- Depreciation = (adjusted cap cost − residual) ÷ number of months.
- Finance charge = (adjusted cap cost + residual) × money factor.
- Payment = depreciation + finance charge, plus sales tax where your state taxes payments.
Worked example
A car with an MSRP of $36,000, negotiated to $35,000, on a 36-month lease with a 60% residual and a money factor of 0.0025 (6% APR), no money down:
- Residual: $36,000 × 60% = $21,600
- Depreciation: ($35,000 − $21,600) ÷ 36 = $372.22
- Finance charge: ($35,000 + $21,600) × 0.0025 = $141.50
- Payment before tax: $513.72
Payment by money factor and residual
Same car and term as the example, before tax.
| Money factor (APR) | 50% residual | 55% residual | 60% residual | 65% residual |
|---|---|---|---|---|
| 0.0015 (3.6%) | $551.72 | $504.42 | $457.12 | $409.82 |
| 0.002 (4.8%) | $578.22 | $531.82 | $485.42 | $439.02 |
| 0.0025 (6.0%) | $604.72 | $559.22 | $513.72 | $468.22 |
| 0.003 (7.2%) | $631.22 | $586.62 | $542.02 | $497.42 |
| 0.0035 (8.4%) | $657.72 | $614.02 | $570.32 | $526.62 |
Lease or buy?
Leasing usually means a lower monthly payment and a newer car every few years, but you own nothing at the end and pay extra for miles over the limit. Buying costs more each month but builds equity. Compare with a loan in the car payment calculator and the car affordability calculator, and check the tax on a purchase with the car sales tax calculator.
Frequently asked questions
How is a car lease payment calculated?
A lease payment has two parts. Depreciation: (adjusted cap cost − residual value) ÷ months. Finance charge: (adjusted cap cost + residual value) × money factor. Add the two, then add sales tax if your state taxes monthly payments.
What is a money factor?
The money factor is the lease’s interest rate written as a small decimal. Multiply it by 2,400 to get the approximate APR: a money factor of 0.0025 is about 6% APR.
What is a residual value?
The residual is what the leasing company expects the car to be worth at the end of the lease, set as a percentage of MSRP. A higher residual means less depreciation to pay for, so a lower payment.
Is it worth putting money down on a lease?
A down payment lowers the monthly payment but does not lower the total cost much, and if the car is written off early that money is usually lost. Many buyers keep the down payment small and negotiate the price instead.
How does a trade-in work in the car lease calculator?
Enter your trade-in equity (its value minus any loan still owed). It lowers the adjusted cap cost just like a down payment. If you owe more than the car is worth (negative equity), add that amount to the negotiated price instead.
How is sales tax charged on a lease?
Most states tax each monthly payment at the local sales tax rate. Some states tax the full price or the total of all payments up front instead. Check your state’s rules before you sign.