Auto Lease Calculator
Work out a car lease payment from capitalized cost, residual value and money factor.
Inputs
Used to calculate residual value as a % of MSRP.
The agreed sale price — your starting cap cost before adjustments.
Down payment, trade-in equity, or rebates that reduce the cap cost.
Percentage of MSRP the car is expected to be worth at lease end. Set by the lessor.
Provided by the dealer. Multiply by 2400 to get the equivalent APR. Example: 0.00125 × 2400 = 3%.
Applied to each monthly payment in most states.
Dealer or bank processing fee, typically $400–$1,000.
Monthly Lease Payment
$441.14
Equivalent APR
3.00%
Money factor × 2400. Compare this to loan APR when deciding lease vs. buy.
Depreciation Fee / mo
$348.47
Finance Fee / mo
$63.81
Residual Value
$19,250
The car's value at lease-end. You can buy it for this amount.
Total Lease Cost
$17,881
All payments plus any upfront cash paid.
Total Finance Charge
$2,297
Adjusted Cap Cost
$31,795
Step by step
Adjusted cap cost
$33,000 − $2,000 + $795 (fee)
= $31,795.00
Residual value
55% × $35,000 MSRP
= $19,250.00
Depreciation fee
($31,795 − $19,250) ÷ 36 months
= $348.47
Covers the car's value loss over the lease.
Finance fee
($31,795 + $19,250) × 0.00125
= $63.81
Equivalent APR: 3.00% (money factor × 2400)
Monthly payment (pre-tax)
$348.47 + $63.81
= $412.28
Monthly payment (with tax)
$412.28 + $28.86 tax
= $441.14
How it works
An auto lease payment has two parts. The depreciation fee covers the difference between the vehicle's starting value (adjusted cap cost) and ending value (residual) spread over the term — this is the portion of the car you're 'using up'. The finance fee compensates the lessor for tying up capital; it's calculated on the average of the cap cost and residual value, multiplied by the money factor. Money factor is the leasing industry's equivalent of a monthly interest rate — multiply by 2400 to get the approximate annualized APR for comparison with loan rates. A lower money factor means a lower finance fee and a lower payment.
Formulas
Depreciation fee
Depreciation fee = (Adjusted cap cost − Residual) / Term months
- C_{adj}
- Adjusted capitalized cost
- R
- Residual value
- T
- Term in months
Finance fee
Finance fee = (Adjusted cap cost + Residual) × Money Factor
- MF
- Money factor
Money factor to APR
Equivalent APR ≈ Money Factor × 2400
Frequently Asked Questions
How do I convert a money factor to an APR?
Multiply the money factor by 2400. A money factor of 0.00125 × 2400 = 3% APR. This conversion is an industry standard, not a precise mathematical identity, but it's close enough for comparison purposes. If a dealer quotes only APR, divide by 2400 to get the money factor.
What is a cap cost reduction and should I make one?
A cap cost reduction is an upfront payment that reduces the amount being depreciated, lowering your monthly payment. Unlike a loan down payment, it doesn't build equity — you're still returning the car at the end. If the car is totalled early in the lease, you lose that upfront cash. Most leasing experts recommend minimising the cap cost reduction and keeping cash liquid.
What is the residual value and how does it affect my payment?
The residual is the car's projected value at lease end, set by the lessor (bank/manufacturer). A higher residual means less depreciation to recover, which means lower monthly payments. Manufacturers subsidise leases on popular models by inflating the residual. You can usually buy the car at the end for the stated residual price.
Should I lease or buy?
Leasing has lower monthly payments and lets you drive a new car every few years with minimal maintenance risk. But you build no equity, face mileage limits, and may pay disposition fees at turn-in. Buying costs more monthly but builds equity and provides ownership flexibility. Use the Cash Back or Low Interest Calculator for APR-sensitive comparisons.