How do you use this tool?
- Enter the vehicle MSRP (sticker price) and the negotiated selling price (capitalized cost).
- Enter any cap cost reductions: down payment, rebates, or trade-in value.
- Enter the residual value — the vehicle's projected value at lease end, stated as a dollar amount or percentage of MSRP.
- Enter the money factor (e.g. 0.00125). If the dealer gives you a rate, divide it by 2,400 to convert APR to money factor.
- Enter the lease term in months (typically 24, 36, or 39 months) and click Calculate.
What This Tool Does
This calculator computes the monthly payment for a US car lease using the standard closed-end lease formula. It handles the full cost structure: capitalized cost, cap cost reductions, residual value, depreciation component, and finance charge. It also converts money factor to APR so you can make apples-to-apples comparisons.
How Are Lease Payments Calculated?
A US lease payment has two components:
Depreciation Component = (Adjusted Capitalized Cost − Residual Value) ÷ Lease Term
Finance Charge = (Adjusted Capitalized Cost + Residual Value) × Money Factor
Monthly Payment = Depreciation Component + Finance Charge
| Term | Meaning |
|---|---|
| Adjusted Cap Cost | Negotiated price − cap cost reductions (down payment, rebates, trade-in) |
| Residual Value | Projected vehicle value at lease end |
| Money Factor | Lease financing rate (APR ÷ 2,400) |
| Lease Term | Number of months (typically 24–48) |
Worked Example
- MSRP: $45,000 | Negotiated price: $43,000
- Cap cost reduction (rebate): $2,000 → Adjusted cap cost: $41,000
- Residual value: 55% of MSRP = $24,750
- Money factor: 0.00135 (≈ 3.24% APR)
- Term: 36 months
Depreciation = ($41,000 − $24,750) ÷ 36 = $451.39/month
Finance charge = ($41,000 + $24,750) × 0.00135 = $88.76/month
Monthly payment before tax ≈ $540.15
How Do You Convert Money Factor to APR?
| Money Factor | Approximate APR |
|---|---|
| 0.00083 | 2.0% |
| 0.00125 | 3.0% |
| 0.00167 | 4.0% |
| 0.00208 | 5.0% |
| 0.00250 | 6.0% |
| 0.00292 | 7.0% |
Formula: APR = Money Factor × 2,400
What Are Common Use Cases?
Comparing Lease vs. Buy
Run this calculator alongside the loan payment calculator. If the lease payment is significantly lower and you plan to upgrade every 3 years, leasing may make financial sense. If you drive over 15,000 miles per year or keep vehicles long-term, buying usually wins on total cost.
Spotting Dealer Markups
Manufacturer finance arms publish base money factors monthly. If a dealer quotes you a monthly payment that doesn’t match your calculation at the base rate, they have likely marked up the money factor. The markup is pure dealer profit and is usually negotiable.
Evaluating Manufacturer Incentives
Some lease deals feature subvented money factors (below-market rates set by the manufacturer) paired with lower residuals. A subvented deal at 0.00050 with a 45% residual may cost more per month than a market-rate deal at 0.00120 with a 58% residual, depending on the vehicle price. This calculator lets you compare both scenarios in seconds.
End-of-Lease Purchase Analysis
At lease end, you can typically purchase the vehicle at the residual value. If market value exceeds the residual, purchasing (then selling or keeping) can be financially advantageous. The residual is set at signing and does not change regardless of market conditions.
What Are Key Lease Terms?
Closed-End Lease: The standard US consumer lease. You return the vehicle at lease end with no obligation if it is within mileage limits and normal wear. The lender absorbs any difference between actual market value and the predetermined residual.
Acquisition Fee: A lender fee charged at lease inception, typically $595–$1,095. It is either paid upfront or rolled into the cap cost.
Disposition Fee: Charged at lease end if you do not purchase the vehicle or start a new lease with the same lender. Usually $300–$400.
Excess Mileage: Standard leases allow 10,000–15,000 miles per year. Excess is charged at $0.15–$0.30 per mile depending on the lender and vehicle class.
Frequently Asked Questions
Should I put money down on a lease?
Generally no. A down payment on a lease reduces monthly payments but is not refunded if the car is stolen or totaled in the first month. Most advisors recommend rolling cap cost reductions into a lower monthly payment or negotiating a lower selling price instead.
Can I negotiate the residual value?
No. Residual values are set by the lender and are not negotiable. Only the selling price (capitalized cost), money factor markup, and fees are negotiable.
What is a one-pay lease?
A one-pay or single-payment lease means paying the entire lease amount upfront. Lenders often offer a reduced money factor for one-pay leases, which can lower total cost — but eliminates the cash-flow benefit of monthly payments.
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