Car Lease Calculator
The real dealer math — payment from cap cost, residual, and money factor, fully broken down
Sticker price — sets the residual
Capitalized cost — negotiate this like a purchase
Typically 50–65% for 36 months
APR ÷ 2400 — e.g. 0.00125 = 3% APR
Most states tax the monthly payment
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Quick summary
A lease payment has two parts: depreciation ((cap cost − residual) ÷ months) plus a finance charge ((cap cost + residual) × money factor), plus tax. On a $40,000-MSRP car negotiated to $38,000 with $2,000 down, a 60% residual, 0.00125 money factor, and 36 months: $333 depreciation + $75 finance = about $408/month before tax. Multiply the money factor by 2400 to see the equivalent APR.
Reviewed by Simple Calculators TeamLast reviewed
How to use this calculator
- Enter the inputs requested by the calculator.
- Choose the units or options that match your situation and review the assumptions.
- Run or update the calculation to see the result.
- Review the result, breakdown, and formulas shown on the page.
- Check the inputs, units, dates, and limitations before saving or sharing the result.
Frequently asked questions
How is a lease payment calculated?
Two components: monthly depreciation = (capitalized cost − residual value) ÷ term, and monthly finance charge = (capitalized cost + residual value) × money factor. Tax is added on top, on the payment itself in most states. That finance charge applying to cap PLUS residual surprises people — you pay interest on the whole car, not just the part you use.
What is a money factor?
The lease world's interest rate: APR ÷ 2400. A 0.00125 money factor is a 3% APR. Always ask for the money factor and multiply by 2400 — quoting it as a tiny decimal makes high rates look innocuous, and marking it up is a common dealer profit center.
What is residual value?
The predicted value of the car at lease end, set by the leasing bank as a percentage of MSRP (typically 50–65% at 36 months). Higher residual = lower payment, since you're paying for less depreciation. It's non-negotiable, but it's why some brands lease much better than others.
Should I put money down on a lease?
Generally as little as possible. A down payment (cap cost reduction) lowers the monthly payment but is money you don't get back — and if the car is totaled early, you can lose it entirely since insurance pays the leasing company. Keep due-at-signing low and let the payment reflect the true cost.
Can I negotiate a lease?
Yes — negotiate the capitalized cost exactly like a purchase price before mentioning leasing. The residual is fixed and the money factor has a floor, but the cap cost is fully negotiable, and every dollar off reduces both the depreciation and finance portions.
Key terms
- Capitalized Cost
- The negotiated price of the car being financed in the lease — negotiate it like a purchase.
- Money Factor
- The lease interest rate: APR ÷ 2400. Multiply by 2400 to see the real rate.
- Residual Value
- Bank-set predicted value at lease end (% of MSRP) — what you'd pay to buy the car after.
- Cap Cost Reduction
- A lease down payment — lowers the payment but is at risk if the car is totaled.
Methodology, sources & limitations
This page shows the formula, assumptions, and limitations used for this estimate. Rates, thresholds, and other time-sensitive inputs can change, so verify them against the relevant official source before relying on a result.
For our review approach and the primary sources we consult, see the methodology and source policy. If you spot an outdated figure or formula, please contact us with a correction.