Car Lease Calculator
Calculate your exact monthly lease payment and compare leasing vs buying the same vehicle side by side.
How to Calculate a Car Lease Payment — The Money Factor Formula
Most car buyers sign leases without understanding how the monthly payment is calculated. The payment consists of two components: a depreciation charge (you are paying for the portion of the car's value consumed during the lease) and a finance charge (the cost of the money, expressed as a money factor). Dealers can mark up the money factor — the lease equivalent of an interest rate — without disclosure, adding $20–$80/month to the payment as hidden profit.
| Vehicle Price | Residual % | Money Factor | Term | Calculated Payment | MF APR Equivalent |
|---|---|---|---|---|---|
| $30,000 | 60% | 0.00200 | 36 mo | $378/mo | 4.8% |
| $40,000 | 57% | 0.00250 | 36 mo | $495/mo | 6.0% |
| $55,000 | 54% | 0.00220 | 36 mo | $636/mo | 5.3% |
| $40,000 | 57% | 0.00350 | 36 mo | $562/mo | 8.4% — marked up |
The last row shows the same vehicle with the money factor marked up from 0.00250 to 0.00350 — an APR increase from 6.0% to 8.4%. The payment increases by $67/month — $2,412 over a 36-month lease — as pure additional profit to the dealer. Always ask the dealer for the base money factor from the manufacturer's programme. A dealer who refuses to disclose it is marking it up.
What Is Residual Value and Why It Changes Your Payment by Hundreds
$40,000 vehicle, 65% residual = $26,000 end value. Depreciation = ($40,000 − $26,000) ÷ 36 = $389/month. Manufacturer is predicting strong resale. Often indicates a subsidised deal.
$40,000 vehicle, 48% residual = $19,200 end value. Depreciation = ($40,000 − $19,200) ÷ 36 = $578/month. Same price, $189/month more. Vehicles with poor resale value lease expensively.
The highest-residual vehicles in the US market are typically Japanese SUVs and trucks — Toyota RAV4, Honda CR-V, Toyota Tacoma. European luxury vehicles often have lower residuals (higher lease payments relative to price) unless the manufacturer subsidises them. Checking the residual value before choosing which vehicle to lease can save hundreds per month. Use the car lease calculator to compare any two vehicles side by side.
Car Lease Calculator — FAQ
Common questions answered with real numbers.
Monthly lease payment = depreciation fee + finance fee. Depreciation fee = (Capitalised Cost minus Residual Value) divided by lease term in months. Finance fee = (Capitalised Cost plus Residual Value) multiplied by the money factor. Example: $40,000 vehicle, 57% residual ($22,800), 0.00250 money factor, 36 months, $3,000 down. Cap cost = $37,000. Depreciation = ($37,000 - $22,800) / 36 = $394/mo. Finance = ($37,000 + $22,800) x 0.00250 = $149/mo. Payment before tax = $543/mo.
Money factor is the lease equivalent of an interest rate, expressed as a small decimal (typically 0.00100 to 0.00400). To convert to approximate APR, multiply by 2,400. A money factor of 0.00250 equals 6.0% APR. Dealers can mark up the manufacturer's base money factor as additional profit. Always ask for the base money factor from the manufacturer's programme — a 0.00100 markup adds approximately $30–$60/month to the payment.
Residual value is the percentage of a vehicle's MSRP the manufacturer predicts it will be worth at lease end. It is the largest factor in monthly payment — higher residual means lower payment because you finance less depreciation. A $40,000 vehicle with a 65% residual leases for approximately $189/month less than the same vehicle with a 48% residual. Residual value cannot be negotiated — compare vehicles to find those with high residuals.
Yes — but only two of three lease components are negotiable. The capitalised cost (selling price) is fully negotiable just like a purchase price. The money factor can be negotiated down from any dealer markup to the base rate. The residual value cannot be negotiated — it is set by the manufacturer. Focus on negotiating the selling price first, then verify the money factor is at the base rate using the car lease calculator.
Drive-off amount is the upfront payment at lease signing, including the first month's payment, security deposit (if any), acquisition fee ($595–$895), DMV fees, and any capitalised cost reduction (down payment). A larger drive-off reduces monthly payments but does not reduce total lease cost — it is money paid upfront rather than monthly. In the event of total loss in month 2, that drive-off amount is not recovered.
A one-pay lease is where you pay the entire lease cost upfront in a single payment. The advantage is typically a lower money factor (the manufacturer treats it as lower risk). On a 36-month lease with $495/month standard, a one-pay might be $16,500 total versus $17,820 in monthly payments — a $1,320 saving. The disadvantage is losing the upfront payment if the car is totalled or stolen, since gap insurance only covers the remaining monthly payment structure.