Auto Lease Calculator · Practical guide
How to Calculate a Car Lease Payment
A lease payment is depreciation plus a finance charge, with sales tax applied on top.
At a glance
The Formula
A monthly lease payment has two parts. Depreciation = (net capitalized cost − residual value) ÷ term in months. Finance charge = (net capitalized cost + residual value) × money factor. Add the two, then multiply by (1 + tax rate) for the payment with tax.
Interactive tool
Auto Lease Calculator
Enter your own values, then compare the result with the examples below.
Results
Worked Example
MSRP $40,000, negotiated price $37,000, $3,000 down, residual 58% ($23,200), money factor 0.00125, 36 months, 7% tax:
- Net cap cost: $37,000 − $3,000 = $34,000
- Monthly depreciation: ($34,000 − $23,200) ÷ 36 = $300.00
- Monthly finance charge: ($34,000 + $23,200) × 0.00125 = $71.50
- Pre-tax payment: $300.00 + $71.50 = $371.50
- With 7% tax: $371.50 × 1.07 = $397.51
Total lease cost is 36 payments plus the down payment: $397.51 × 36 + $3,000 ≈ $17,310.
What Each Input Does
| Input | Effect on Payment |
|---|---|
| Lower negotiated price | Cuts depreciation — every $1,000 off saves about $28/month on a 36-month term |
| Higher residual % | Cuts depreciation; you pay for less of the car |
| Higher money factor | Raises the finance charge (0.00125 ≈ 3% APR) |
| Down payment / trade-in | Lowers net cap cost and both payment parts |
Frequently Asked Questions
What is the net capitalized cost?
It is the negotiated selling price minus your down payment and trade-in value. This is the amount the lease payment is actually based on.
Where do I find the money factor and residual?
Ask the dealer. The residual percentage and money factor (or 'buy rate') are set by the leasing company, and dealers must disclose them.
Why is a lease payment lower than a loan payment on the same car?
A lease only charges you for the depreciation during the term plus finance costs, while a loan pays off the entire vehicle price.
Does the down payment get taxed in a lease?
Tax treatment of upfront amounts varies by state. This calculator applies the tax rate to the monthly payment, which is the most common structure.