Auto Lease Calculator

An auto lease calculator computes the monthly payment by breaking it into three components: depreciation, a finance charge (also called the rent charge), and tax. Unlike a purchase loan where each payment reduces a principal balance, a lease payment covers the vehicle's expected drop in value over the term, plus a finance cost on the capitalized amount, plus applicable sales tax. The key inputs are the negotiated price (adjusted cap cost), the residual value, the money factor, and the lease term.

Calculate your monthly lease payment broken into depreciation, finance charge, and tax. Includes buyout estimate.

Vehicle Price (MSRP)$35,000.00

$5,000.00$100,000.00

Down Payment / Cap Cost Reduction

$2,000.00

$0$17,500.00

Residual Value

55% ($19,250.00)

10%85%

Money Factor

Equivalent APR: 3%

Lease Term36 months

12 mo60 mo

Sales Tax Rate7%

0%12%

Purchase Option Fee

$350.00

Monthly Lease Payment

$478.56

per month for 36 months

Depreciation

$381.94

$13,750.00 total

Finance Charge (Rent)

$65.31

$2,351.25 total

Monthly Tax

$31.31

$1,127.09 total

Adjusted Cap Cost

$33,000.00

Price minus down payment

Residual Value

$19,250.00

55% of MSRP

Total Lease Cost

$17,228.16

36 payments

Lease Payment Breakdown

Depreciation = ($33,000.00 - $19,250.00) / 36 = $381.94

Finance charge = ($33,000.00 + $19,250.00) x 0.00125 = $65.31

Pre-tax payment = $381.94 + $65.31 = $447.26

Tax = $447.26 x 7% = $31.31

Monthly payment = $381.94 + $65.31 + $31.31 = $478.56

End-of-Lease Buyout Price

Residual Value

$19,250.00

Purchase Fee

$350.00

Total Buyout Price

$19,600.00

This is an estimate for informational purposes only. Actual lease terms vary by lessor, state, credit profile, and vehicle. Always review your lease agreement before signing.

Month	Payment	Depreciation	Finance	Tax	Total Paid
1	$478.56	$381.94	$65.31	$31.31	$478.56
2	$478.56	$381.94	$65.31	$31.31	$957.12
3	$478.56	$381.94	$65.31	$31.31	$1,435.68
4	$478.56	$381.94	$65.31	$31.31	$1,914.24
5	$478.56	$381.94	$65.31	$31.31	$2,392.80
6	$478.56	$381.94	$65.31	$31.31	$2,871.36
7	$478.56	$381.94	$65.31	$31.31	$3,349.92
8	$478.56	$381.94	$65.31	$31.31	$3,828.48
9	$478.56	$381.94	$65.31	$31.31	$4,307.04
10	$478.56	$381.94	$65.31	$31.31	$4,785.60
11	$478.56	$381.94	$65.31	$31.31	$5,264.16
12	$478.56	$381.94	$65.31	$31.31	$5,742.72
13	$478.56	$381.94	$65.31	$31.31	$6,221.28
14	$478.56	$381.94	$65.31	$31.31	$6,699.84
15	$478.56	$381.94	$65.31	$31.31	$7,178.40
16	$478.56	$381.94	$65.31	$31.31	$7,656.96
17	$478.56	$381.94	$65.31	$31.31	$8,135.52
18	$478.56	$381.94	$65.31	$31.31	$8,614.08
19	$478.56	$381.94	$65.31	$31.31	$9,092.64
20	$478.56	$381.94	$65.31	$31.31	$9,571.20
21	$478.56	$381.94	$65.31	$31.31	$10,049.76
22	$478.56	$381.94	$65.31	$31.31	$10,528.32
23	$478.56	$381.94	$65.31	$31.31	$11,006.88
24	$478.56	$381.94	$65.31	$31.31	$11,485.44
25	$478.56	$381.94	$65.31	$31.31	$11,964.00
26	$478.56	$381.94	$65.31	$31.31	$12,442.56
27	$478.56	$381.94	$65.31	$31.31	$12,921.12
28	$478.56	$381.94	$65.31	$31.31	$13,399.68
29	$478.56	$381.94	$65.31	$31.31	$13,878.24
30	$478.56	$381.94	$65.31	$31.31	$14,356.80
31	$478.56	$381.94	$65.31	$31.31	$14,835.36
32	$478.56	$381.94	$65.31	$31.31	$15,313.92
33	$478.56	$381.94	$65.31	$31.31	$15,792.48
34	$478.56	$381.94	$65.31	$31.31	$16,271.04
35	$478.56	$381.94	$65.31	$31.31	$16,749.60
36	$478.56	$381.94	$65.31	$31.31	$17,228.16

Total Paid: $17,228.16Finance Charges: $2,351.25

Car Lease Payment Calculator with Money Factor

The money factor is the lease industry's way of expressing the interest component of a lease. It is a small decimal (for example, 0.00125) that converts to an annual percentage rate by multiplying by 2,400. A money factor of 0.00125 equals a 3.00% APR. The finance charge portion of each monthly payment is calculated by multiplying the sum of the adjusted cap cost and the residual value by the money factor. A lower money factor produces a lower finance charge and a lower total monthly payment.

Worked example (computed by engine): A $35,000.00 vehicle with $2,000.00 down, a 55% residual value, a money factor of 0.00125 (3% APR), a 36-month term, and 7% sales tax produces an adjusted cap cost of $33,000.00. The residual value is $19,250.00. Monthly depreciation is $381.94, the finance charge is $65.31, pre-tax payment is $447.25, tax is $31.31, and the total monthly lease payment is $478.56. Over 36 months the total lease cost is $17,228.16.

Lease Payment Calculator Residual Value

The residual value is the leasing company's estimate of what the vehicle will be worth at the end of the lease term, expressed as a percentage of MSRP. It is set by the lessor using industry depreciation data and is not typically negotiable. A higher residual value means the vehicle is expected to retain more of its worth, which reduces the amount of depreciation you pay each month.

Comparison (computed by engine): Using the same $35,000.00 vehicle with $2,000.00 down, MF 0.00125, 36 months, and 7% tax: at a 50% residual ($17,500.00), the monthly payment is $528.25 for a total cost of $19,017.00. At a 60% residual ($21,000.00), the payment drops to $428.89 for a total of $15,440.04. The 10-percentage-point difference in residual value changes the monthly payment by $99.36 and saves $3,576.96 over the full lease term.

Note that a higher residual also means a higher buyout price at lease end. If you plan to purchase the vehicle, the lower payment from a high residual is offset by a larger final payment.

How to Calculate a Car Lease Payment

The standard lease payment formula has three steps. First, calculate the monthly depreciation by subtracting the residual value from the adjusted cap cost and dividing by the lease term. Second, calculate the monthly finance charge by adding the adjusted cap cost and residual value together and multiplying by the money factor. Third, add applicable sales tax, which in most states is applied to the combined depreciation and finance charge.

Step-by-step with numbers: Using a $35,000.00 MSRP, $2,000.00 down (adjusted cap cost = $33,000.00), 55% residual ($19,250.00), money factor 0.00125, and 36-month term:

Depreciation = ($33,000.00 - $19,250.00) / 36 = $381.94 per month. Finance charge = ($33,000.00 + $19,250.00) x 0.00125 = $65.31 per month. Pre-tax payment = $381.94 + $65.31 = $447.25. Tax = $447.25 x 7% = $31.31. Total monthly payment = $478.56.

This formula is the same one used by dealerships and leasing companies. The calculator above applies it automatically and shows each component separately.

Car Lease Calculator with Tax by State

Lease tax treatment varies by state and affects the total cost of the lease. The most common approach, used by the majority of states, is to apply the sales tax rate to each monthly payment. Under this method, the tax is included in the payment shown by the calculator above.

Some states require tax to be paid on the total of all lease payments upfront. In those states (including Texas and Illinois in many cases), the total tax is added to the capitalized cost at the start of the lease, which increases the monthly payment slightly because the finance charge is then calculated on a larger base. Other states tax the full selling price of the vehicle rather than the depreciation, which can produce a significantly higher tax amount.

Because the rules differ, the calculator uses the most common method (tax on the monthly payment). If your state uses a different approach, consult your lease agreement or your state's department of revenue for the exact treatment.

Lease Buyout Payment Calculator

At the end of a closed-end lease, you typically have the option to purchase the vehicle for its residual value plus any purchase option fee stated in the contract. The buyout price is therefore the residual value plus the purchase option fee. Using the worked example above, the residual is $19,250.00 and a typical purchase option fee of $350.00 produces a buyout price of $19,600.00.

Whether buying out the lease makes financial sense depends on the vehicle's actual market value at that point compared to the buyout price. If the car is worth more than the buyout price on the open market, purchasing it and immediately selling could produce a profit. If it is worth less, returning the vehicle and walking away avoids the loss. The calculator shows the buyout price in the results so you can compare it against third-party valuations when the time comes.

Frequently Asked Questions

What is a good money factor on a car lease?

A money factor below 0.00200 (equivalent to 4.80% APR) is generally considered competitive for a new-vehicle lease. Manufacturers frequently offer subvented rates through their captive finance companies, which can push the money factor as low as 0.00004 (0.10% APR) on promoted models. The exact threshold for a "good" rate depends on the vehicle, the lease term, and your credit profile. The calculator above converts between money factor and APR so you can compare the lease rate to a conventional loan rate.

Can I negotiate the residual value on a lease?

The residual value is set by the leasing company (often the manufacturer's captive finance arm) using industry depreciation guides like ALG. In practice, the residual is not a negotiation point the way the selling price is. However, you can choose a vehicle or trim level with a higher published residual, which directly lowers the monthly payment. A higher residual means the lessor expects the car to retain more value, so less depreciation is passed to you as the lessee.

What fees should I expect on a car lease beyond the monthly payment?

Common lease fees include an acquisition fee (also called a bank fee, typically $300 to $1,000), a disposition fee at lease end ($200 to $500), a purchase option fee if you buy the car, and documentation or registration fees. Some of these are negotiable or can be rolled into the cap cost. The calculator above includes a purchase option fee input so you can see the total buyout price, but does not add acquisition or disposition fees to the monthly payment.

What happens if I exceed the mileage limit on my lease?

Most leases include an annual mileage allowance, commonly 10,000 or 12,000 miles per year. If you exceed the total allowance, the lessor charges an excess-mileage penalty, typically $0.15 to $0.30 per mile. On a 36-month lease with a 12,000-mile-per-year allowance (36,000 total), driving 45,000 miles would mean 9,000 excess miles. At $0.20 per mile, that adds $1,800 to the cost of the lease. This cost is not included in the calculator above, so factor it in separately if you expect to exceed your mileage limit.

Is it better to lease or buy a car?

Leasing and buying serve different situations. Leasing typically produces a lower monthly payment than financing a purchase because you are paying for depreciation rather than the full vehicle price. However, at lease end you do not own the car. Buying costs more per month but builds equity. The better choice depends on how long you keep vehicles, your annual mileage, whether you can deduct lease payments for business use, and whether you want to avoid the risk of negative equity on a long loan term. Use the calculator above for the lease side, then compare with the Auto Loan Calculator to see the purchase side.

Related Calculators

Comparing lease versus purchase? Use the Auto Loan Calculator to compute the monthly payment and total cost of financing the same vehicle. To determine how much vehicle you can afford in the first place, see the Car Affordability Calculator. Browse all auto tools on the Auto Calculators hub.

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