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Car Lease Calculator

Calculate your monthly car lease payment including depreciation, finance charges, and sales tax. Compare lease vs buy and understand residual values.

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How to Use This Calculator

Car leasing is essentially paying for the depreciation of a vehicle over a set term rather than its full purchase price. This calculator breaks down the three components of a lease payment: the depreciation fee (the biggest portion, based on how much value the car loses during the lease), the finance fee (interest on the lease, expressed as a money factor), and sales tax. Understanding these components is key to negotiating a better lease deal. The money factor is the lease equivalent of an interest rate — multiply it by 2,400 to get the approximate APR. A lower money factor means lower finance charges. The residual value is what the leasing company estimates the car will be worth at the end of the lease term, expressed as a percentage of MSRP. A higher residual value means lower depreciation and lower payments. Luxury brands and vehicles that hold their value well (Honda, Toyota, Lexus) tend to have higher residual values. Always negotiate the capitalized cost (selling price) of the vehicle, not just the monthly payment, as dealers can manipulate payments by adjusting the term or money factor. This calculator helps you see through the numbers and evaluate whether a lease makes financial sense for your situation.

Frequently Asked Questions

Is it better to lease or buy a car?
Leasing is better if you want lower monthly payments, always want a newer car with warranty coverage, drive under 12,000-15,000 miles per year, and prefer not to deal with selling or trading in. Buying is better long-term financially because once the loan is paid off you own the asset. Over 10 years, buying and keeping a car is typically 30-50% cheaper than continuously leasing.
What is a money factor and how does it relate to APR?
The money factor is a decimal number used to calculate the finance charge on a lease. To convert to an approximate APR, multiply by 2,400. A money factor of 0.0025 equals about 6% APR. Lower money factors are better. Well-qualified buyers can often get money factors equivalent to 2-4% APR, while those with lower credit may see the equivalent of 8-12% APR.
What happens at the end of a car lease?
At lease end you have three options: return the car and walk away, purchase the car at the predetermined residual value, or trade it in on a new lease. If the car is worth more than the residual value, buying it can be a good deal. You will owe disposition fees ($300-$500) if returning the car, plus charges for excess mileage (typically $0.15-$0.25 per mile) and any damage beyond normal wear.

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