Car Lease Calculator

A car lease calculator adds two monthly charges. The depreciation fee is (adjusted cap cost − residual value) ÷ months, and the rent charge is (adjusted cap cost + residual value) × money factor. For a $35,000 cap cost, a $21,000 residual, 36 months and a 0.00250 money factor, that is $388.89 + $140.00 = $528.89 a month before sales tax.

How to use the car lease calculator

1. Enter the MSRP and the price you negotiated. The residual value is usually quoted as a percent of MSRP, while the payment is built from the negotiated price.
2. Enter the residual value and the lease rate exactly as the offer states them, either as a money factor such as 0.00250 or as an APR.
3. Add your cash down, any rebates and your trade-in (with any amount still owed on it), then the sales tax rate and the fees.
4. Read the monthly payment, the amount due at signing and the total lease cost. Open Show steps and the payment calculation table to check each line against the dealer’s worksheet.
5. Use the Lease vs buy tab to compare the same car bought with a loan, and the Money factor tab to convert between money factor and APR.

Car lease payment formula

A lease payment pays for the part of the car’s value you use up, plus a finance charge for the money tied up in the car:

• Gross capitalized cost = negotiated price + fees rolled into the lease (such as an acquisition fee) + any negative equity from a trade-in.
• Capitalized cost reduction = cash down + trade-in equity + rebates.
• Adjusted capitalized cost = gross capitalized cost − capitalized cost reduction.
• Depreciation fee = (adjusted cap cost − residual value) ÷ number of months.
• Rent charge = (adjusted cap cost + residual value) × money factor.
• Monthly payment = (depreciation fee + rent charge) × (1 + sales tax rate), in states that tax each payment.

The Federal Reserve’s vehicle leasing glossary uses the same terms. It calls the depreciation part “depreciation and any amortized amounts”, and defines the rent charge as the part of the base monthly payment that is not depreciation, similar to interest on a loan. Federal Regulation M requires lessors to disclose the payment as exactly this progression: gross capitalized cost, capitalized cost reduction, adjusted capitalized cost, residual value, depreciation and any amortized amounts, rent charge, and the total and base periodic payments. The calculator shows that table so you can compare it line by line with your contract.

Worked example

A car has an MSRP of $40,000 and a negotiated price of $37,500. A $995 acquisition fee is rolled into the lease. You pay $2,000 down and get a $500 rebate. The lease runs 36 months with a 58% residual and a money factor of 0.00250, and 7% sales tax applies to each payment.

1. Gross cap cost: 37,500 + 995 = $38,495. Cap cost reduction: 2,000 + 500 = $2,500. Adjusted cap cost: 38,495 − 2,500 = $35,995.
2. Residual value: 58% × 40,000 = $23,200.
3. Depreciation fee: (35,995 − 23,200) ÷ 36 = 12,795 ÷ 36 ≈ $355.42.
4. Rent charge: (35,995 + 23,200) × 0.00250 = 59,195 × 0.00250 ≈ $147.99.
5. Base payment: $355.42 + $147.99 = $503.40 (to the cent, from unrounded parts). Tax: 7% of that is $35.24. Monthly payment: $538.64.
6. Due at signing, with $400 of title and registration fees: 538.64 + 2,000 + 400 = $2,938.64.
7. Total lease cost: 36 × 538.64 = $19,391.13 (from the unrounded payment), plus $2,000 down, $400 fees and a $395 disposition fee, which is $22,186.13.

Money factor to APR

The common rule of thumb is APR ≈ money factor × 2,400, and money factor ≈ APR ÷ 2,400. It works because the balance you use falls from the cap cost to the residual, so the average balance is about (cap cost + residual) ÷ 2. One month of interest on that average at yearly rate r is (cap cost + residual) × r ÷ 24. With r in percent, divide by 2,400.

Treat the APR as a comparison guide only. The Federal Reserve’s glossary notes that a money factor is not a lease rate. Federal law does not require a uniform lease rate calculation or disclosure, so the dependable number to compare between offers is the rent charge itself.

Trade-ins and negative equity on a lease

If your trade-in is worth more than you owe, the difference lowers the cap cost like cash down. If you owe more than it is worth, the shortfall is usually added to the cap cost, so you pay depreciation and rent charge on it. In the example, a $4,000 trade-in with $7,000 owed adds $3,000. That raises the payment from $538.64 to $635.83 a month: $83.33 of extra depreciation and $7.50 of extra rent charge, plus tax.

Lease vs buy: how the comparison works

A fair comparison looks at the same period, the lease term. Leasing costs the total of what you pay, and you keep nothing at the end. Buying costs the down payment, fees and loan payments over that period, minus your equity at the end, which is what the car is worth minus what you still owe.

For the example car bought with a 60-month loan at 6.5%, you would pay $736.18 a month, and after 36 months you would still owe $16,526.11. If the car is then worth its $23,200 residual, your equity is $6,673.89. The net cost of buying is $22,228.46, only $42.33 more than leasing. Small changes, such as a lower loan rate or a higher resale value, can flip the result. Buying also keeps paying off after the loan ends. For the full loan schedule, use our car loan calculator.

Common car lease mistakes

• Negotiating only the monthly payment. The price, the money factor, fees and the residual all change it, so ask for each one.
• Applying the residual percentage to the negotiated price instead of the MSRP, when the offer says MSRP.
• Confusing a money factor such as 0.0025 with a 0.25% rate. Multiply by 2,400 to compare it with an APR.
• Putting a large amount down. It lowers the payment, but you do not get it back if the car is totaled or the lease ends early.
• Ignoring the mileage limit and wear charges in the contract, which the payment does not include.

Results are estimates, not a lease offer or financial advice. Tax treatment of leases differs by state.

Sources

Checked November 2026:

• Federal Reserve: Vehicle leasing glossary
• Federal Reserve: Leasing vs. buying, rate disclosure
• CFPB: Regulation M § 1013.4, content of lease disclosures

Car lease practice quiz: 10 questions

Test yourself with 10 multiple-choice questions. Choose an answer and press Submit to see if you are right and why. Your score appears at the end.

Frequently asked questions

How do you calculate a car lease payment?

Add the depreciation fee, (adjusted cap cost − residual) ÷ months, and the rent charge, (adjusted cap cost + residual) × money factor. Then add sales tax if your state taxes each payment. A $35,000 cap cost, a $21,000 residual, 36 months and a 0.00250 money factor give $528.89 before tax.

How do I convert a money factor to an interest rate?

Multiply it by 2,400. A money factor of 0.00250 is about 6% APR, and 0.00175 is about 4.2%. To go the other way, divide the APR by 2,400.

What is a good residual value?

A higher residual means less depreciation to pay, so the payment is lower. The leasing company sets the residual for each model, term and yearly mileage. Compare residuals between models and terms using the numbers in each offer.

Is it better to lease or buy a car?

It depends on how long you keep cars, how far you drive and the rates you are offered. Leasing often costs less over a short period. Buying usually costs less if you keep the car for years after the loan is paid. The Lease vs buy tab compares both over the lease term with your numbers.

Should I put money down on a lease?

A cap cost reduction lowers the depreciation and rent charge, but you pay it up front and do not get it back if the lease ends early. Many people prefer a small down payment and a slightly higher monthly payment.

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