Lease payments mainly cover the car’s depreciation over the lease, plus a finance charge. A high residual value and a low money factor make a lease cheaper. Negotiate the price just like a purchase – it is rarely fixed.
How to use the Car Lease Calculator
- MSRP
- Negotiated price
- Lease term
- Residual value
- Interest given as
- Money factor
- APR
- Down payment (cap cost reduction)
- Trade-in value
- Rebates and incentives
- Acquisition and dealer fees
- Sales tax
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the MSRP, negotiated price, term, residual percentage, money factor or APR, down payment, trade-in, rebates, fees and sales tax.
Tips
- Use your real spending from bank statements rather than guesses.
- Automate savings so they happen before you spend.
- Revisit your plan once a year or after any big life change.
- Keep an emergency fund before investing for long-term goals.
Common mistakes to avoid
- Underestimating irregular expenses such as car repairs, gifts and annual bills.
- Ignoring inflation for long-term goals.
- Taking on high-interest debt to fund wants.
Inputs explained
| Field | What to enter |
|---|---|
| MSRP | Amount in your currency |
| Negotiated price | Amount in your currency |
| Lease term | In months |
| Residual value | In % |
| Interest given as | Choose one: Money factor, APR |
| Money factor | A number |
| APR | In % |
| Down payment (cap cost reduction) | Amount in your currency |
| Trade-in value | Amount in your currency |
| Rebates and incentives | Amount in your currency |
| Acquisition and dealer fees | Amount in your currency |
| Sales tax | In % |
What each result means
- Equivalent APR = [Money factor used]×2400
- Net capitalized cost = [Negotiated price] + [Acquisition and dealer fees] – [Down payment (cap cost reduction)] – [Trade-in value] – [Rebates and incentives]
- Residual value = [MSRP]×[Residual value]÷100
- Monthly depreciation fee = ([Net capitalized cost] – [Residual value])÷[Lease term]
- Monthly finance fee = ([Net capitalized cost] + [Residual value])×[Money factor used]
- Monthly payment before tax = [Monthly depreciation fee] + [Monthly finance fee]
- Monthly payment with tax = [Monthly payment before tax]×(1 + [Sales tax]÷100)
- Total cost of the lease = [Monthly payment with tax]×[Lease term] + [Down payment (cap cost reduction)] + [Trade-in value] + [Rebates and incentives]×0
Example values
How the main result changes when MSRP changes and everything else stays at the example values above:
| MSRP | Monthly payment with tax |
|---|---|
| 20,000 | 868.59 |
| 30,000 | 711.71 |
| 40,000 | 554.84 |
| 50,000 | 397.97 |
| 60,000 | 241.09 |
| 80,000 | -72.65 |
Formula
Net capitalized cost = negotiated price + fees − down payment − trade-in − rebatesResidual value = MSRP × residual %Depreciation fee = (net cap cost − residual) ÷ termFinance fee = (net cap cost + residual) × money factor (= APR ÷ 2400)Payment = (depreciation + finance) × (1 + sales tax)Worked example
Inputs — MSRP: $40,000; Negotiated price: $37,500; Lease term: 36 months; Residual value: 58 %; Interest given as: Money factor; Money factor: 0.0025; APR: 6 %; Down payment (cap cost reduction): $2,000; Trade-in value: $0; Rebates and incentives: $0; Acquisition and dealer fees: $995; Sales tax: 7 %.
Results — Money factor used = 0.0025; Equivalent APR = 6 %; Net capitalized cost = $36,495.00; Residual value = $23,200.00; Monthly depreciation fee = $369.31; Monthly finance fee = $149.24; Monthly payment before tax = $518.54; Monthly payment with tax = $554.84; Total cost of the lease = $21,974.28.
Frequently asked questions
What is a money factor?
The lease's interest rate expressed as APR ÷ 2400.
What is a good residual value?
Higher is better for the lessee – 55–65% for a 36-month lease is common.
Should I put money down on a lease?
Keep it small; if the car is totalled early, the down payment is usually lost.
What formula does the Car Lease Calculator use?
Net capitalized cost = negotiated price + fees − down payment − trade-in − rebates.