This car lease calculator builds a monthly lease payment the way the dealer sheet does — depreciation plus finance charge — from the vehicle’s capitalized cost, residual value, money factor and term, with the money factor translated into plain APR.
Excludes sales tax (applied to the monthly payment in most states, to the full price in a few), acquisition and disposition fees, and mileage overages (typically $0.15–0.30/mile beyond 10–12k/year). The residual is set by the lessor, not negotiated; the capitalized cost — the vehicle’s selling price — absolutely is.
The Two-Part Lease Payment
Monthly = (cap cost − residual) ÷ months + (cap cost + residual) × money factor. The first part pays for the value the car will lose while you drive it — you’re renting the depreciation, not the car. The second is interest in a trench coat: the money factor is a decimal that converts to APR by multiplying by 2,400 (0.00125 → 3.0%). Lease-vs-own for housing is our Rent vs Buy Calculator‘s territory; the car comparison needs a loan payment from the auto loan pages to set against this figure. Part of our Finance Calculators collection.
Worked Example (Verified)
- $35,000 car, residual $19,250 (55%), money factor 0.00125, 36 months (defaults): depreciation = 15,750 ÷ 36 = $437.50; finance = 54,250 × 0.00125 = $67.81 → $505.31/month, $18,191 over the term
- Money factor translation: 0.00125 × 2,400 = 3.00% APR-equivalent — the number dealers quote in decimal precisely because it looks smaller
- A $2,000 down payment cuts the payment by ~$61/month (depreciation −$55.56, finance −$2.50) but is lost entirely if the car is totaled in month 2 — gap insurance logic says put as little down on a lease as possible
- Residual leverage: at 60% residual ($21,000), the same car leases for ≈ $457/month — high-residual models (strong resale) are the real lease bargains, not the advertised discounts
Negotiating What Actually Moves
- Cap cost — the sale price of the car. Every $1,000 off = ~$28–30/month on a 36-month lease. Negotiate the price first, mention leasing second.
- Money factor — marked up by dealers above the bank’s buy rate; tier-1 credit should see the base rate. Ask for it in writing; the ×2,400 translation exposes padding instantly.
- Residual & term & miles — set by the lessor’s tables; choosing the right mileage band upfront beats overage penalties at turn-in, and 36 months is typically the subsidized sweet spot.
- Multiple security deposits (where offered) buy the money factor down — refundable, unlike a down payment.
Related Tools
- Rent vs Buy Calculator — the housing version of lease-vs-own
- APR Calculator — what the financing side really costs
- Finance Calculators — the full collection
Frequently Asked Questions
How is a car lease payment calculated?
In two parts: depreciation (cap cost − residual, spread over the term) plus a finance charge (cap cost + residual) × money factor. For $35,000 with a $19,250 residual, 0.00125 factor and 36 months: $437.50 + $67.81 = $505.31/month before taxes and fees.
What is a money factor?
The lease industry’s interest-rate encoding: a small decimal like 0.00125. Multiply by 2,400 to get the APR equivalent (3.0%). Always translate before signing — the decimal format exists to make the rate look negligible.
What is residual value?
The lessor’s forecast of the car’s worth at lease end, usually quoted as a percentage of MSRP (55% here). Higher residual = less depreciation to rent = lower payment. It’s fixed by the lender’s tables for your term/mileage — not negotiable, but choosing models with strong residuals is.
Should I put money down on a lease?
Generally no, beyond first month and fees: a down payment only pre-pays depreciation (saving trivial interest), and if the car is stolen or totaled early, the insurance payout goes to the lessor while your down payment vanishes. Keep the cash; accept the higher monthly.
Lease or buy — which is cheaper?
Buying wins on total cost for anyone keeping a car 6+ years (payments end; leases never do). Leasing wins on monthly cash flow, perpetual warranty coverage and always driving new — you’re paying a premium for those, and this calculator sizes it.
Is this car lease calculator free?
Yes — free, instant, no sign-up.