Auto Lease Calculator

How Lease Payments Are Actually Calculated

Every lease payment is really two separate charges added together. The first is a depreciation fee: the difference between the car's adjusted capitalized cost (price minus your down payment and trade-in, plus fees) and its residual value, spread evenly across the lease term. The second is a rent charge (the leasing equivalent of interest), calculated by multiplying the sum of the adjusted cap cost and residual value by the money factor. Sales tax is then applied on top, typically on the monthly payment itself in most states rather than the full vehicle price. This calculator follows that standard structure, which is how most manufacturer and dealer lease worksheets compute the number you're quoted.

Money Factor Is Just a Disguised Interest Rate

Dealers quote a "money factor" like 0.00125 instead of a percentage, which makes it hard to compare against loan rates. As a quick check, multiply the money factor by 2400 to get its approximate equivalent APR — in this example, 0.00125 x 2400 = 3%. This calculator shows that converted APR alongside your payment so you can judge whether the financing terms are competitive with what you'd get from an auto loan instead.

Buying vs. Leasing

Leasing usually wins on lower monthly payments, but you build no equity and face mileage and wear-and-tear limits. If you're weighing whether to lease or finance a purchase outright, run the same vehicle price through the auto loan calculator and compare total cost over the same term, keeping in mind a purchased car retains resale value a leased one does not.