Car Lease Payment Calculator
Calculate monthly lease payment from MSRP, negotiated price, residual value, money factor, and lease term.
What this calculates
Auto leases use specific math that confuses most buyers: monthly payment combines depreciation, interest (called the 'money factor'), and tax. This calculator breaks down all three so you can spot a bad deal — overpriced money factor, inflated capitalized cost, or a residual that doesn't match the car's actual resale value.
Formula & how it works
Depreciation = (cap_cost − residual) ÷ term_months. Finance charge = (cap_cost + residual) × money_factor. Money factor × 2400 = APR equivalent. Pre-tax monthly = depreciation + finance. Final = pre-tax + tax (rate varies by state, applied to monthly payment in most states).
Worked example
$40K MSRP, $36K cap cost (negotiated), 36-month, $22K residual (55 %), 0.00125 money factor. Depreciation = (36000 − 22000) / 36 = $389. Finance = (36000 + 22000) × 0.00125 = $72.50. Pre-tax = $461.50. 7 % tax adds $32. Final monthly = $494. APR equivalent = 0.00125 × 2400 = 3 %.
Frequently asked questions
What's a money factor?
Disguised interest rate. Multiply by 2400 to get APR. A 0.0015 money factor = 3.6 % APR. Anything above 0.002 (4.8 % APR) is expensive in normal market conditions. Captive lenders sometimes offer 0.00001 ('lease money money') promotional rates.
What's residual value?
What the manufacturer claims the car is worth at lease end (as a % of MSRP). Higher residual = lower depreciation = lower payment. 50-60 % residual on 36-month is typical. Cars with strong resale (Toyota, BMW) have higher residuals — making them lease well.
Is leasing always worse than buying?
Depends. Leasing wins when residual is unusually high (rare manufacturer subsidy), or when you'd trade every 3 years anyway. Buying wins long-term — keep a car 8+ years and you avoid years of payments entirely.
What's cap cost reduction?
Money you pay upfront to reduce the capitalized cost — like a down payment on a lease. Common amounts: $500-3000. Lowers monthly but you risk losing it if the car is totaled before lease end. Many experts recommend zero cap cost reduction.
Disclaimer: Informational only — get a full lease worksheet from the dealer to verify all numbers.