Auto Lease Calculator
A lease payment split into what it costs to use the car and what it costs to borrow it — because only one of those is negotiable.
The address carries whatever you changed, so anyone opening it sees these numbers. Nothing is saved on our side.
Monthly payment
$550
$435.97 of it is depreciation — what the car loses while you have it — and $77.62 is the rent charge, which is interest at an effective 3%. Tax adds $35.95.
- $38,895
- what is being financed
- $23,200
- 58% of MSRP
- $435.97
- $77.62
- 15.1% of the payment
- 3%
- factor × 2,400
- $19,783
What negotiating the price is worth
The residual and the money factor are set by the leasing company. The price is not, and it is the only number in the quote you control.
| Price | Monthly payment | Total cost | vs yours |
|---|---|---|---|
| $3,000 offCap cost $35,895 | $456 | −$3,354 less in total | |
| $2,000 offCap cost $36,895 | $487 | −$2,236 less in total | |
| $1,000 offCap cost $37,895 | $518 | −$1,118 less in total | |
| As quotedyoursCap cost $38,895 | $550 | — |
Every dollar off the price comes off the capitalized cost, so it reduces both the depreciation you pay for and the rent charge computed on it. Over a 36-month lease that is roughly a dollar of payment for every 34 dollars negotiated — which is why walking the price down matters more than anything else on the sheet.
The four numbers to ask for
A lease quote is one payment. These are the parts, and a dealer who will not give you all four is not giving you a quote.
Capitalized cost
The agreed price plus fees, less anything you pay up front. This is the negotiation. Ask for it as a number, not as a discount off MSRP.
Residual value
What the car is projected to be worth at lease end, as a percentage of MSRP. The leasing company sets it and it is not negotiable — but a higher residual means a lower payment, so it is worth knowing which cars have good ones.
Money factor
The interest rate, disguised as a decimal. Multiply it by 2,400 to get an APR you can compare to a loan. A factor of 0.00250 is 6% — if the number you are quoted works out above what a loan would cost, the lease is not cheap financing.
Mileage allowance
Not in this calculation, and capable of dominating it. Exceeding the allowance is charged per mile at lease end. Buying extra miles up front is normally cheaper than paying the overage, so decide honestly at signing rather than optimistically.
Also excluded here: wear-and-tear charges, the disposition fee at lease end, gap insurance, and any difference in insurance premiums. Each can change the answer, and none of them is in the monthly number a dealer leads with. Buying the car at lease end costs the residual — $23,200 on these figures.
How this calculator works
The standard lease formula, with the two components kept apart rather than summed into one figure.
Depreciation fee = (cap cost − residual) ÷ term. What the car loses while you have it. The only way down is a lower price.
Rent charge = (cap cost + residual) × money factor. The interest — and note the plus sign. You are financing the residual as well as the part you use up, which is why the money factor converts to an APR by multiplying by 2,400 rather than 1,200.
Tax is applied on the basis your state uses, because the difference is large: most states tax the monthly payment, some tax the full price at signing. Cash down and any trade-in reduce the capitalized cost; fees increase it, which means they attract rent charge too.
What is assumed
- The residual percentage applies to MSRP, not to your negotiated price. This is how leases work and it is worth checking on your sheet.
- You stay within the mileage allowance and return the car in acceptable condition.
- The money factor is fixed for the term.
- No disposition fee, gap insurance or early termination.
A worked example
A $40,000 car negotiated to $38,000, 36 months, 58% residual, money factor 0.00125, no tax.
| Residual value | $40,000 × 58% |
|---|---|
| Capitalized cost | Negotiated price, nothing down |
| Depreciation fee | (38,000 − 23,200) ÷ 36 |
| Rent charge | (38,000 + 23,200) × 0.00125 |
| Money factor as APR | 0.00125 × 2,400 |
| Base monthly payment | 411.11 + 76.50 |
84% of the payment is depreciation and 16% is interest. That ratio is the useful thing to know before a negotiation: at a low money factor there is almost nothing to win on the financing, and every dollar of leverage is in the price.
Watch what the rent charge is computed on, too. Using the difference rather than the sum — $14,800 rather than $61,200 — would give $18.50 instead of $76.50, and a payment of $429.61. If a calculator or a quote shows a suspiciously low finance component, this is usually why.
Questions people ask
It has two parts. The depreciation fee is (capitalized cost − residual value) ÷ term, which is what the car loses while you have it. The rent charge is (capitalized cost + residual value) × money factor, which is the interest. Add them for the base payment, then add tax. Note the rent charge is computed on the sum, not the difference — you are financing the residual too, because the leasing company has its money tied up in the whole car.
It is the interest rate expressed as a small decimal, such as 0.00125. Multiply by 2,400 to get the approximate APR — 0.00125 is 3%. The 2,400 is not a convention: it is 2 × 12 × 100, and the factor of two falls out of the rent charge being computed on the sum of two balances rather than on one declining balance. Always ask for the money factor by name; a dealer quoting only a monthly payment is not quoting you terms.
The capitalized cost, and essentially nothing else. The residual is set by the leasing company from its own projections and is fixed. The money factor is set by the lender, though it can sometimes be marked up by the dealer, so it is worth asking for the buy rate. The price is the lever, and every dollar off it reduces both the depreciation you pay for and the rent charge computed on it.
Generally no. A down payment on a lease lowers the payment but barely changes the total cost — you are prepaying, not saving. Worse, if the car is stolen or totalled early, the insurance settles with the leasing company and your down payment is simply gone. Money down on a purchase builds equity; money down on a lease buys nothing you can recover.
Most likely mileage, tax basis, or fees. Check that the acquisition fee is in the capitalized cost, that the residual percentage is applied to MSRP rather than to your negotiated price, and that your state's tax treatment matches the setting above — some states tax the full price at signing rather than the monthly payment. If it still differs, ask for the cap cost, residual and money factor in writing and re-enter them.
Mileage limits and the per-mile charge for exceeding them, which can dominate the whole comparison; wear-and-tear charges at return; the disposition fee; gap insurance; and any difference in insurance premiums. None of these appears in the monthly number a dealer leads with, and each is a real cost. Buying extra miles at signing is normally cheaper than paying the overage later.
Related calculators
It excludes mileage limits and overage charges, wear-and-tear charges, the disposition fee, gap insurance and insurance premium differences. Each is a real cost and any of them can change the decision.