fincalculatorAuto Lease Calculator
Use this free Auto Lease Calculator to estimate monthly lease payments and total leasing costs. Simple, accurate, and easy to use online.
Leasing a vehicle works differently than buying one, and the math can be confusing. The Auto Lease Calculator demystifies the components of a lease payment to help you understand exactly what you are paying for. Unlike a loan where you pay for the whole car, a lease payment essentially covers the vehicle's depreciation (loss in value) during the time you drive it, plus a finance charge (rent charge).
Leasing is attractive because it often offers lower monthly payments than buying the same car with a loan. However, it comes with restrictions like mileage limits and lack of ownership equity. This calculator helps you estimate your real monthly costs, including taxes, to determine if leasing fits your lifestyle and budget.
When to Use This Calculator
The Auto Lease Calculator is essential if you enjoy driving new cars every 2-3 years and want to avoid the hassle of selling a used car later.
- Comparing Leases: Dealers often advertise low lease payments that exclude tax or require large down payments. Use this tool to standardize the inputs and see the true "zero down" cost.
- Negotiating: Knowing how variables like the Money Factor (interest rate) or Residual Value impact your payment allows you to spot if a dealer has marked up the rate.
Example Scenario
Consider a luxury SUV with an MSRP of $50,000.
- Negotiated Price (Cap Cost): $48,000
- Residual Value: 60% ($30,000) after 36 months
- Money Factor: 0.0025 (approx. 6% APR)
- Term: 36 months
You are essentially paying for the $18,000 difference between the price ($48k) and the residual value ($30k), plus interest on the total value of the car. The calculator will break this down into a specific monthly figure, likely around $600-$700 depending on your local tax rate.
Formula & Calculation Method
Formula Used
Variable Explanation
- Depreciation: (Capitalized Cost - Residual Value) ÷ Term
- Finance Charge: (Capitalized Cost + Residual Value) × Money Factor
- Residual Value: Expected value of the car at the end of the lease
Step-by-Step Calculation
- 1. Determine the Residual Value (MSRP × Residual %).
- 2. Calculate monthly depreciation by spreading the loss in value over the lease term.
- 3. Calculate the monthly rent charge (finance fee) using the Money Factor.
- 4. Add Depreciation and Finance Charge to get the Base Monthly Payment.
Interpretation Notes
Lease calculations can be complex. This assumes the Money Factor is estimated from the APR (APR ÷ 2400) and excludes local sales tax.
How to Interpret the Results
The Auto Lease Calculator breaks down lease payments into two main parts:
Depreciation Fee: This pays for the value the car loses while you possess it. Calculated as (Net Capitalized Cost - Residual Value) ÷ Lease Term.
Finance (Rent) Charge: This is interest paid to the leasing company for using their money to buy the car. Calculated using the Money Factor. A Money Factor of 0.001 multiplied by 2400 roughly equals a 2.4% APR.
Common Mistakes
Putting Money Down on a Lease: Financial experts generally advise against making a large down payment (Cap Cost Reduction) on a lease. If the car is totaled in an accident early in the lease, that down payment is often lost. It is usually better to pay a higher monthly fee than to risk thousands upfront.
Ignoring Mileage Limits: Leases simulate ownership for a specific number of miles (e.g., 10,000 or 12,000 per year). Exceeding this limit results in expensive per-mile penalties at the end of the term. Be realistic about your driving habits before signing.