The Auto Lease Calculator estimates the monthly payment of a car lease from the price, lease term, money factor or interest rate, down payment, trade-in, sales tax and residual value.
Monthly lease payment: $617.99
| Monthly payment | $617.99 |
| Depreciation fee | $444.44 |
| Finance fee (rent charge) | $133.12 |
| Monthly sales tax | $40.43 |
| Total of payments | $22,247.78 |
| Total lease cost (with down and trade-in) | $32,247.78 |
| Money factor / equivalent rate | 0.00208 / 4.992% |
A lease is a long-term rental. You pay for the part of the car's value you use up during the lease (depreciation) plus a finance charge, and return the car at the end, or buy it for the residual value. Monthly payments are usually lower than loan payments for the same car, but you own nothing at the end.
Depreciation fee = (capitalized cost − residual value) ÷ term. Finance fee = (capitalized cost + residual value) × money factor. Sales tax is usually charged on the monthly payment. Capitalized cost is the price minus down payment and trade-in.
Worked example (defaults): cap cost $40,000, residual $24,000, 36 months, money factor 0.00208. Depreciation $444.44 + finance $133.12 = $577.56, plus 7% tax = $617.99 a month.
Dealers quote the finance charge as a money factor. Multiply it by 2,400 to get the approximate annual interest rate: 0.00208 × 2,400 ≈ 5%. Ask for the money factor explicitly, since dealers sometimes mark it up.
Negotiate the price just as you would when buying; a lower cap cost lowers the payment. A high residual value helps. Large down payments are risky: if the car is stolen or written off, the down payment is usually lost. Check mileage limits (often 10,000–15,000 miles a year) and wear charges.
Is leasing cheaper than buying? Usually not over the long run, but it gives a new car every few years with lower payments.
Can I end a lease early? Usually only with large fees.
Can I buy the car at the end? Yes, for the residual value plus fees.