# Car Lease Calculator

Calculate monthly car lease payments from price, residual value, money factor, and term. Compare lease costs and see the equivalent APR.

## What this calculates

Estimate your monthly car lease payment before you step on the lot. Enter the vehicle price, residual value, money factor, and lease term to see a complete cost breakdown including finance charges and equivalent APR.

## Inputs

- **Vehicle Price (MSRP)** ($) — min 0 — The sticker price or negotiated sale price of the vehicle.
- **Down Payment** ($) — min 0 — Upfront cash to reduce the capitalized cost.
- **Residual Value** (%) — min 0, max 95 — The vehicle's projected end-of-lease value as a percentage of MSRP.
- **Money Factor** — min 0, max 0.01 — Lease interest factor. Divide APR by 2,400 to get this number.
- **Lease Term (Months)** — options: 24 months, 27 months, 36 months, 39 months, 48 months — How many months you will lease the vehicle.
- **Sales Tax Rate** (%) — min 0, max 15 — Local sales tax applied to the monthly payment (varies by state).

## Outputs

- **Monthly Payment (pre-tax)** — formatted as currency — Base monthly lease payment before sales tax.
- **Monthly Payment (with tax)** — formatted as currency — Monthly payment including applicable sales tax.
- **Total Lease Cost** — formatted as currency — All payments plus down payment over the full term.
- **Depreciation Cost** — formatted as currency — Total value the vehicle loses during the lease.
- **Finance Charges** — formatted as currency — Total interest paid over the lease term.
- **Equivalent APR** — formatted as percentage — The money factor converted to annual percentage rate.

## Details

A car lease payment has two parts: the depreciation fee and the finance fee. The depreciation fee covers the vehicle's loss in value during the lease. The finance fee is the interest you pay to the leasing company.

Here is how the math works: Depreciation Fee = (Net Cap Cost - Residual Value) / Term. Finance Fee = (Net Cap Cost + Residual Value) x Money Factor. Your monthly payment is the sum of these two amounts. A $35,000 vehicle with $2,000 down, 55% residual, and a 0.0015 money factor on a 36-month lease comes to about $411/month before tax.

The money factor is just a different way to express the interest rate. Multiply the money factor by 2,400 to get the approximate APR. So 0.0015 equals about 3.6% APR. When comparing lease offers between dealers, always compare money factors directly. Lower is better.

One often-overlooked cost: mileage limits. Most leases allow 10,000-15,000 miles per year. Going over typically costs $0.15-$0.25 per extra mile, which can add thousands at lease return. Factor your actual driving habits into the decision.

## Frequently Asked Questions

**Q: What is a good money factor for a car lease?**

A: A good money factor is generally below 0.0020 (equivalent to about 4.8% APR). Excellent credit scores (720+) can qualify for money factors as low as 0.0005-0.0010 (1.2%-2.4% APR). Manufacturers sometimes offer subsidized money factors below market rates as incentives, especially on slow-selling models. Always negotiate the money factor just like you would an interest rate on a car loan.

**Q: How is residual value determined?**

A: The leasing company (not the dealer) sets the residual value based on the vehicle's projected depreciation. Vehicles that hold their value well (like Toyota, Honda, and some luxury brands) have higher residuals, which means lower monthly payments. Residual values typically range from 45% to 65% of MSRP for a 36-month lease. You cannot negotiate the residual value.

**Q: Should I put money down on a lease?**

A: Financial advisors often recommend against large down payments on leases. If the vehicle is totaled or stolen, gap insurance covers the lease balance but you lose your down payment. A better strategy is to negotiate a lower vehicle price (cap cost reduction happens at the dealer level) rather than putting cash down. If you want a lower monthly payment, consider a shorter term or a vehicle with a higher residual value.

**Q: Is leasing cheaper than buying?**

A: Leasing has lower monthly payments because you only pay for depreciation, not the full price. But if you always lease, you always have a payment. Buying and keeping a car for 8-10 years is almost always cheaper long-term. Leasing makes sense if you want a new car every 2-3 years, drive within mileage limits, and prefer lower monthly costs over building equity.

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Source: https://vastcalc.com/calculators/finance/car-lease
Category: Finance
Last updated: 2026-04-08