Car Lease CalculatorWork out a lease payment the same way the dealer does
Enter the MSRP, the price you negotiated, the residual value and the money factor. You get the monthly payment split into depreciation, rent charge and tax, plus the total cost of the lease and the equivalent interest rate.
Your lease deal
How to use the Car Lease Calculator
- Enter the MSRP from the window sticker. The residual value is based on this number, not the price you pay.
- Enter the negotiated price. Yes, you can negotiate the price of a leased car, and it is the single biggest lever on your payment.
- Add your down payment and any trade-in equity.
- Enter the residual percentage and the money factor for your term and mileage. Dealers and leasing companies set these; ask the dealer for both numbers. You can switch to APR if that is what you were quoted.
- Add your sales tax rate and the acquisition fee, then read the payment and its breakdown.
How a lease payment is calculated
When you lease, you pay for the part of the car’s value you use up, plus a finance charge, plus tax. The payment has three parts:
- Depreciation fee: the difference between the adjusted capitalized cost (the price after your down payment) and the residual value, divided by the number of months.
- Rent charge: the lease version of interest. It is the adjusted cap cost plus the residual, multiplied by the money factor.
- Sales tax: in most states, charged on each monthly payment rather than the full price of the car.
Because you only pay for depreciation, a car that holds its value well (a high residual) leases for less than a car with a similar price that loses value quickly.
Key lease terms explained
| Term | What it means |
|---|---|
| Capitalized cost | The price of the car in the lease, plus capitalized fees. Negotiate it like a purchase price. |
| Cap cost reduction | Your down payment, trade-in equity and rebates, which lower the amount being leased. |
| Residual value | What the car is expected to be worth at lease end, as a % of MSRP. It is also your buyout price. |
| Money factor | The lease interest rate in decimal form. Multiply by 2,400 to get the approximate APR. |
| Acquisition fee | A bank fee to set up the lease, usually $595 to $1,095. |
| Disposition fee | A fee charged when you return the car, often around $300 to $500. |
| Mileage allowance | Miles you can drive per year. Extra miles typically cost 15 to 30 cents each. |
How to tell if a lease deal is good
A quick check many shoppers use is the 1% rule: a lease payment at or below about 1% of MSRP per month, with little or nothing down, is usually a solid deal. On a $40,000 car that would be about $400 a month. Payments well above 1.25% of MSRP suggest there is room to negotiate.
Also check these points before you sign:
- Is the money factor marked up? Dealers can add to the base rate set by the leasing company. Ask for the “buy rate.”
- Is the price negotiated? A lease built on full MSRP leaves money on the table.
- Are there hidden add-ons? Protection packages or accessories may be rolled into the cap cost.
- Does the mileage fit your driving? Choosing too few miles can be expensive at lease end.
Should you put money down on a lease?
A big down payment lowers the monthly payment, but it is risky. If the car is stolen or totaled early in the lease, GAP coverage pays off the leasing company, but your down payment is usually lost. Many experts suggest putting as little down as possible on a lease and covering only the first month and fees at signing. The calculator lets you try different down payments to see how much each $1,000 changes your payment.
Leasing vs buying
Leasing usually gives you a lower monthly payment and a new car every few years, with repairs mostly covered by warranty. Buying costs more per month at first, but once the loan is paid off you own an asset and have no payment. Drivers who cover many miles, keep cars for a long time, or like to modify their vehicles often come out ahead by buying.
The formula behind it
Residual = MSRP × Residual %
Depreciation fee = (Adjusted cap cost − Residual) ÷ Months
Rent charge = (Adjusted cap cost + Residual) × Money factor
Monthly payment = (Depreciation + Rent charge) × (1 + Tax rate)
APR ≈ Money factor × 2,400
Tax rules for leases vary by state. A few states tax the full price or the down payment upfront, so treat the result as an estimate and confirm with the dealer’s worksheet.
Car lease facts
Frequently asked questions
How is a car lease payment calculated?
What is a good money factor?
How do I convert money factor to APR?
Can I negotiate a car lease?
Is it better to lease or buy a car?
What happens at the end of a lease?
Related tools and guides
Choosing your next car?
Our buying guides cover what to look for before you lease or buy.
Results are estimates for general information only and are not a lease offer. Actual residuals, money factors, taxes and fees depend on the leasing company, your credit and your state. Always review the dealer’s lease worksheet before signing.