Lease Calculator
Estimate the monthly payment for a car lease.
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Understand Your Car Lease Payments
Our Lease Calculator helps you estimate the monthly payment for a vehicle lease by breaking down the depreciation, interest (rent charge), and taxes.
What is a Lease Calculator?
A Lease Calculator is a financial tool that demystifies the cost of leasing a vehicle. It estimates your monthly lease payment by breaking it down into its core components: the depreciation fee, the finance fee (or rent charge), and taxes. By inputting the vehicle's price, its projected value at the end of the lease (residual value), the lease term, and the interest rate (money factor), you can get a clear picture of your financial commitment and compare different lease offers effectively.
How It Works: The Lease Payment Formula
Your monthly lease payment is made up of three parts:
1. Monthly Depreciation = (Capitalized Cost - Residual Value) / Lease Term (months)
2. Monthly Rent Charge = (Capitalized Cost + ResidualValue) × Money Factor
3. Monthly Payment = (Monthly Depreciation + Monthly Rent Charge) + Sales Tax
The **Capitalized Cost** is the negotiated price of the car, and the **Residual Value** is its estimated worth at the end of the lease. The **Money Factor** is the interest rate expressed as a small decimal.
Interpreting Your Lease Payment
The calculator will show you your estimated **Total Monthly Payment**. The key takeaway is understanding that most of this payment covers the vehicle's depreciation—the amount of value it loses during the time you drive it. The rest covers the financing cost and taxes. This is why leasing a car that holds its value well often results in a lower monthly payment.
Common Leasing Myths
- Myth 1: Leasing is just like renting. While you don't own the car, a lease is a long-term financial commitment. Unlike a short-term rental, you cannot easily break a lease without significant financial penalties.
- Myth 2: A $0 down lease is free upfront. A "zero down" lease often just means the down payment is rolled into the monthly payments. You will still likely have to pay the first month's payment, acquisition fees, and other charges at signing.
- Myth 3: You can't negotiate a lease. Everything in a lease is negotiable: the capitalized cost (the car's price), the money factor, the allowed mileage, and even the residual value, though the latter is often set by the leasing company.
Frequently Asked Questions
How is a car lease payment calculated?
A car lease payment is calculated based on three main components: the depreciation fee (the difference between the vehicle's initial price and its projected residual value), the rent charge (the interest, calculated using a money factor), and sales tax. Our Lease Calculator combines these to estimate your monthly payment.
What is a money factor in a lease?
A money factor is essentially the interest rate for a lease, expressed as a small decimal. To convert a money factor to an equivalent APR, you multiply it by 2,400. For example, a money factor of 0.0025 is equivalent to a 6% APR.
Is it better to lease or buy a car?
Leasing typically offers lower monthly payments and allows you to drive a new car every few years. Buying a car costs more upfront and has higher monthly payments, but you own the vehicle outright at the end of the loan and build equity. The best choice depends on your financial situation and priorities.
Can you negotiate a car lease?
Yes, almost every part of a car lease is negotiable, including the capitalized cost (the price of the car), the money factor, the residual value, and the mileage allowance. It's highly recommended to negotiate these terms to get the best possible deal.
Tips for Getting a Good Lease Deal
- Negotiate the Car's Price First: Always negotiate the capitalized cost of the vehicle as if you were buying it. This is the biggest factor in your depreciation payment.
- Know the Money Factor: Ask the dealer for the money factor and convert it to an APR (Money Factor × 2400) to see if you're getting a competitive interest rate.
- Mind the Mileage: Be realistic about how much you drive. Exceeding your mileage allowance can lead to expensive penalties at the end of the lease.
- Check for "Lease-Only" Rebates: Sometimes manufacturers offer special incentives that only apply to leases.
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