π Auto Lease Calculator
Monthly lease payment from cap cost, residual value, and money factor.
Estimated Monthly Payment
Estimates for planning only, not financial advice.
How to Use This Calculator
This calculator rebuilds a dealer lease quote from its raw ingredients so you can see exactly where your monthly payment comes from. Enter the MSRP, the negotiated price, any down payment and fees, the residual percentage, the lease term, the money factor, and your sales tax rate. The result shows the adjusted capitalized cost, the depreciation and rent charge separately, the pre-tax payment, and the payment with tax.
Enter the MSRP and the Negotiated Price. The residual is calculated as a percentage of MSRP, so both numbers matter. Negotiating the price down is the single most effective way to lower a lease payment.
Enter your Down Payment and any Fees Rolled In (acquisition fee, dealer fees). The down payment reduces the capitalized cost; fees rolled in increase it. Try the payment with and without a down payment to see the trade-off.
Set the Residual percentage, Lease Term, and Money Factor. The money factor is the hidden interest rate of the lease: multiply it by 2400 to see the equivalent APR, which the calculator shows automatically.
Read the breakdown: monthly depreciation plus the monthly rent charge equals the pre-tax payment, and sales tax is applied on top. Compare the total lease cost against buying to decide which deal is better for you.
The Lease Payment Formula
Depreciation is the part of the payment that covers the car losing value while you drive it. The rent charge is the financing cost, and it is based on the average of the cap cost and the residual because that is roughly the average amount of the leasing company's money tied up in the car. Unlike a loan, where interest is charged on the declining balance, the rent charge stays the same every month of the lease. That is why the money factor conversion matters so much: a money factor of 0.00208 looks small on paper, but it is a 5 percent APR.
Worked Example
Take a car with a $30,000 MSRP and a $30,000 negotiated price, zero down, no fees rolled in, a 60 percent residual, a 36-month term, and a money factor of 0.00125. The adjusted cap cost is $30,000 and the residual is $18,000. Monthly depreciation = ($30,000 - $18,000) / 36 = $333.33. Monthly rent charge = ($30,000 + $18,000) x 0.00125 = $60.00. The pre-tax payment is $393.33 per month, and the money factor converts to an APR of 3.00 percent. If the residual were only 55 percent ($16,500), depreciation would rise to $375.00 and the payment to $433.13, which shows how much resale value matters to a lease.
Getting the Best Lease Deal
Negotiate the three levers separately. First, negotiate the selling price of the car exactly as if you were buying it, because a lower cap cost shrinks both depreciation and the rent charge. Second, verify the money factor against the manufacturer's advertised "buy rate" for your credit tier; dealers are allowed to mark it up, and the markup goes straight into their pocket. Third, confirm the residual is the leasing company's published figure for your term and mileage, because it is usually not negotiable but is sometimes quoted wrong. Watch out for a large down payment that makes the monthly number look small: you are still paying that money, and it is at risk if the car is totaled early in the lease.
Estimates for planning only, not financial advice.
Frequently Asked Questions
How is a lease payment calculated?
A lease payment has two parts. Monthly depreciation covers the value the car loses during your lease: (capitalized cost minus residual value) divided by the number of months. The monthly rent charge is the financing cost: (capitalized cost plus residual value) multiplied by the money factor. Add those two parts together, then add sales tax, and you get your monthly payment.
What is a money factor and how do I convert it to APR?
The money factor is the lease industry's way of quoting the interest rate, expressed as a small decimal like 0.00208. Multiply it by 2400 to get the equivalent APR, so 0.00208 becomes about 5 percent. Always make this conversion before signing, because dealers can quote a money factor that sounds tiny while hiding a high effective rate.
What counts as a good money factor?
A good money factor depends on current interest rates and your credit, but anything under 0.00125 (about 3 percent APR) is generally attractive, while anything above 0.00250 (about 6 percent APR) is expensive. Manufacturers sometimes offer subsidized leases with money factors near zero on slow-selling models. If your money factor converts to an APR well above the rate you could get on a purchase loan, the dealer may have marked it up.
What is residual value and why does it matter?
Residual value is the leasing company's forecast of what the car will be worth when your lease ends, usually stated as a percentage of MSRP. A higher residual means less depreciation for you to pay, which directly lowers your monthly payment. That is why cars that hold their value well, like many Toyotas and Hondas, often lease for less per month than pricier rivals with worse resale value.
How much should I put down on a lease?
Financial planners usually say to put as little down as possible on a lease. A down payment lowers your monthly payment, but if the car is totaled or stolen, the insurance pays the leasing company and you generally do not get that down payment back. Many experts recommend a "sign and drive" lease with zero down, keeping your cash in savings instead.
Do I pay sales tax on a lease?
In most states you pay sales tax on each monthly payment, which is what this calculator assumes. A few states are different: Texas, Illinois, and Ohio have historically taxed the full selling price of the vehicle up front, which makes leasing noticeably more expensive there. Check your state's rules before comparing a lease quote to one from another state.