Lease Calculator
Work out a car lease payment the way a dealer does. Enter the MSRP and negotiated price, the residual and either the money factor or its APR, then fold in your trade-in, down payment and fees to see the depreciation fee, rent charge, tax, monthly payment, due-at-signing total and total cost of the lease.
Formula
Worked example
A car with a 38,000 MSRP negotiated to 35,000, 58% residual on MSRP (22,040), money factor 0.0025, over 36 months, plus a 695 acquisition fee and no money down. Net cap cost = 35,695. Depreciation = (35,695 - 22,040)/36 = 379.31; rent fee = (35,695 + 22,040) × 0.0025 = 144.34. Base = 523.65, plus 7% tax (36.66) ≈ 560.31 per month.
How a car lease payment is built
A lease payment has two core parts plus tax. The depreciation fee covers the value the car loses while you drive it: the net capitalized cost minus the residual value, spread evenly across the term. The finance fee, often called the rent charge, is interest on the money tied up in the car, calculated as the cap cost plus the residual multiplied by the money factor. Adding the two gives your pre-tax payment, and most U.S. states then apply sales tax to that monthly figure. This calculator itemizes each piece so you can see exactly where the money goes.
Net capitalized cost, trade-in and down payment
The capitalized cost is the real starting point of the lease. It begins with the negotiated selling price, adds any fees that get rolled in (dealer, registration and the bank acquisition fee), then subtracts your up-front reductions: a cash down payment, the net value of a trade-in, and any manufacturer rebates. The result is the net capitalized cost the rest of the math is built on. Lowering the selling price or adding reductions both shrink the depreciation and the rent fee, so they cut the monthly payment twice over. Note that on a lease, a down payment does not build equity, and if the car is totaled or stolen early that cash is usually gone, which is why many advisers keep lease down payments low.
Money factor, APR and the residual
The money factor is simply the lease interest rate in disguise. Multiply it by 2400 to get an approximate APR, so 0.0025 is about 6%. If a dealer quotes you an APR instead, switch the rate input to APR and the calculator converts it back to a money factor by dividing by 2400. The residual value is set by the leasing company as a percentage of MSRP based on projected resale worth, and is rarely negotiable; a higher residual means less depreciation to pay for, which usually lowers the payment. The drive-off (due at signing) figure here is your down payment plus the first month, a common convention, though dealers may also collect taxes, registration and the acquisition fee up front depending on the deal.
Money factor to APR equivalents
| Money factor | Approx. APR | Rate tier |
|---|---|---|
| 0.00083 | 2.0% | Low |
| 0.00125 | 3.0% | Low |
| 0.00208 | 5.0% | Moderate |
| 0.00292 | 7.0% | Moderate |
| 0.00417 | 10.0% | High |
Multiply any money factor by 2400 to estimate the annual percentage rate.
Frequently asked questions
What is a money factor and how does it relate to APR?
The money factor is the lease equivalent of an interest rate, written as a small decimal. Multiply it by 2400 to get the approximate APR, so a money factor of 0.0025 is roughly 6% APR. Lower is better, and a strong credit score earns you a lower factor. If you only have the APR, set the rate input to APR and the calculator converts it for you.
How do a trade-in and down payment affect the payment?
Both reduce the net capitalized cost, the figure the whole lease is built on. A trade-in or cash down lowers the depreciation fee and the rent charge at once, so the monthly payment falls. On a lease, though, that money does not build equity, and if the car is totaled early it is usually not refunded, which is why many people keep lease down payments small.
What does due at signing or drive-off mean?
It is the cash you hand over when the lease starts. This calculator estimates it as your down payment plus the first month payment, a common convention. A dealer may also collect the acquisition fee, registration, and taxes up front, so confirm the exact drive-off figure on the lease worksheet before you sign.
Is the residual based on MSRP or the negotiated price?
The residual percentage is applied to the MSRP (sticker price), not the price you negotiate. That is why a good negotiation lowers the selling price and the depreciation you pay while the residual stays fixed, which is the main way to cut a lease payment.