Lease Calculator
$0.00 / month
How Lease Payments Are Actually Calculated
A lease payment isn't a simplified loan — it's built from two separate pieces added together each month. The depreciation fee covers the vehicle's expected loss in value: the adjusted capitalized cost (negotiated price minus down payment and trade-in, plus fees) minus the residual value, spread evenly across the lease term. The rent charge (the leasing equivalent of interest) is calculated by adding the adjusted cap cost and residual value together and multiplying by the money factor. Sales tax is then applied on top, either monthly or at signing depending on your state — this calculator applies it monthly, which is the most common approach.
What Is a Money Factor?
Dealers quote lease financing as a small decimal called the money factor instead of a percentage rate, which makes payments harder to compare at a glance. To convert it to something more familiar, multiply the money factor by 2,400 to get an approximate APR — this calculator does that conversion for you so you can see roughly how the financing cost compares to a traditional auto loan.
Residual Value Is the Number That Moves the Most
A higher residual value percentage (the vehicle's projected worth at lease-end, set by the leasing company) shrinks the depreciation fee and lowers your payment, since you're only paying for the value used up rather than the full price. Residual values vary significantly by make, model, and term length, so getting a firm residual quote from the dealer before you negotiate is far more useful than comparing sticker prices alone. If you're weighing whether to lease or buy outright, it's worth also running the numbers through the auto lease calculator and a straight purchase comparison side by side.
Frequently Asked Questions
What is a good money factor for a car lease?
Money factors typically range from about 0.00125 to 0.00300 for well-qualified buyers, which is roughly equivalent to a 3% to 7% APR when multiplied by 2,400. Ask the dealer for the exact money factor rather than just an interest rate, since some dealers mark it up without disclosing it clearly.
Why does a higher residual value lower my lease payment?
The residual value is what the car is expected to be worth at lease-end, and you only pay for the difference between the car's adjusted capitalized cost and that residual value (the depreciation portion) plus a financing charge. A higher residual percentage means less depreciation to pay for over the lease term, so your monthly payment drops even if the vehicle price and rate stay the same.