Car Lease Payment Calculator

Estimate your monthly lease payment using the standard industry formula: a depreciation fee (based on how much value the car loses) plus a finance fee (based on the money factor). Taxes and additional fees vary by state and dealer and aren't included here.

A lease payment is two fees added together

You pay for the value the car loses while you have it, plus interest on the money the bank has tied up in it:

depreciation = (cap cost - residual) / term
finance      = (cap cost + residual) x money factor
payment      = depreciation + finance

With the defaults - $30,000 capitalized cost, $18,000 residual, 36 months, a money factor of 0.00125 - depreciation is $12,000 / 36 = $333.33 and the finance fee is $48,000 x 0.00125 = $60.00. The payment before tax is $393.33.

Capitalized cost is the price you negotiated, including any dealer fees rolled in and less your deposit or trade-in: it is the one number on the sheet you control. Residual value is what the leasing bank forecasts the car will be worth at handback, set as a percentage of MSRP by the bank and not negotiable.

Money factor is an interest rate in disguise

Multiply it by 2400 for the approximate APR: 0.00125 x 2400 = 3%. The 2400 is 1200 months-to-years times 2, and that second factor of two is why the finance fee adds cap cost and residual instead of averaging them. Check it: the average balance over the lease is ($30,000 + $18,000) / 2 = $24,000, and 3% of that is $720 a year, or $60 a month - the same finance fee.

Sales tax and dealer fees are not included here, and the tool rejects a residual above the cap cost, which would mean the car gains value while you drive it.

Frequently asked questions

What is a good money factor?

Convert it before judging: 0.00125 is 3% APR, while 0.00300 is 7.2%. Anything at or below prevailing loan rates is competitive, and subsidised factors on promoted models can go far lower.

Does a higher residual value make a lease cheaper?

Yes, and it is the biggest lever on the sheet. Lifting the residual from $18,000 to $20,000 drops depreciation to $277.78 and only lifts the finance fee to $62.50 - a payment of $340.28, about $53 a month less.

Can I negotiate the money factor?

Partly. The bank sets a base factor from your credit tier, but dealers may add a markup of up to about 0.0004, worth roughly 1% APR. Ask for the buy rate, and spend most of your effort on the capitalized cost instead.