Estimate your car lease payment by entering the MSRP, negotiated price, residual value percentage, and money factor. See the breakdown of depreciation, finance charges, and taxes in your monthly payment.
Car leasing is essentially a long-term rental: you pay for the vehicle's expected depreciation during the lease term, plus a finance charge (money factor) and taxes. At lease end, you return the vehicle or buy it out at the predetermined residual value. The structure makes leases monthly-payment-friendly compared to financing (you're paying for only a portion of the car), but typically more expensive over the long run because you never own anything.
Leases involve unfamiliar terminology that dealers can use to obscure the deal. Key terms: **capitalized cost** (the negotiated price), **cap cost reduction** (down payment that lowers the cap cost), **residual value** (predicted value at lease end, expressed as % of MSRP), **money factor** (the lease equivalent of interest rate — multiply by 2,400 for approximate APR), and **acquisition/disposition fees** (lender charges). All of these are negotiable to varying degrees. Most consumers don't realize the negotiated price (cap cost) is negotiable in leasing exactly as in purchasing, and dealers profit when buyers focus only on monthly payment.
This calculator computes the monthly lease payment given all the inputs, broken down into depreciation cost, finance charge, and taxes. Use it to: verify dealer-quoted lease numbers, model how negotiating each variable affects monthly payment, and compare leases across vehicles and lease structures. Leasing makes financial sense in narrow circumstances: short-term needs (1-3 years), heavy business-use vehicles where tax deductibility offsets cost, and luxury vehicles where lease residuals are subsidized by manufacturers. For most personal-use buyers planning to keep a vehicle 5+ years, buying (especially used) is meaningfully cheaper than the lease-trade-lease cycle.
$40,000 MSRP Toyota RAV4, $38,000 negotiated, $0 down, 55% residual, 0.0015 money factor (3.6% APR), 36 months, 7% tax, 12K miles/year. Adjusted cap cost: $38,000 Residual: $22,000 Depreciation: ($38,000 − $22,000) / 36 = $444/month Finance fee: ($38,000 + $22,000) × 0.0015 = $90/month Pre-tax: $534. Tax: $37.38. Total: ~$571/month. Plus initial: ~$1,000 acquisition fee + first payment + DMV fees = $2,500-$3,000 due at signing. Total 3-year cost: $571 × 36 + $3,000 = $23,556. Vehicle returned at lease end (or buy out for $22K residual + sales tax).
$70,000 BMW 5-Series, $65,000 negotiated, $5,000 down, manufacturer-subsidized 62% residual (artificially high), 0.0008 money factor (1.9% APR — very low promotional rate), 36 months, 7% tax. Adjusted cap cost: $60,000 Residual: $43,400 (subsidized — actual market value at 3 years probably $32K-$36K) Depreciation: ($60,000 − $43,400) / 36 = $461/month Finance fee: ($60,000 + $43,400) × 0.0008 = $83/month Pre-tax: $544. Tax: $38. Total: ~$582/month. This is why luxury leases often look "cheap" compared to purchase — the manufacturer subsidizes through high residual and low money factor. Buying makes no sense (immediate $20K underwater); leasing is the financially correct choice for luxury cars driven 36 months and traded. Catch: buyout at lease end is unattractive because residual exceeds market value. Always return the vehicle, never buy out a luxury lease with subsidized residual.
$30,000 Honda Civic, $29,500 negotiated, $0 down, 48% residual (lower than fair), 0.0030 money factor (7.2% APR — bad), 36 months. Adjusted cap cost: $29,500 Residual: $14,400 Depreciation: ($29,500 − $14,400) / 36 = $419/month Finance fee: ($29,500 + $14,400) × 0.0030 = $132/month Pre-tax: $551. Tax: $39. Total: ~$590/month. Same car purchased at $29,500 with 6% financing over 60 months = $570/month — and at month 60, the buyer owns the car worth ~$14K. This is a bad lease. High money factor signals dealer or lender markup. Low residual signals an unfavorable vehicle to lease (Civics don't hold value as well as some competitors). Walk away or shop a different vehicle.
Use this calculator before signing any lease to verify quoted payments match the math, compare lease offers across vehicles, and assess whether each lease is competitive or contains hidden markups.
Pair with lease-vs-buy (head-to-head economic comparison) and car-affordability (general budgeting).
Important lease considerations:
1. **Negotiate the cap cost.** Many buyers don't realize the negotiated price is just as negotiable on a lease as on a purchase. Treat lease negotiation as purchase negotiation — get to a fair price first, then negotiate lease terms.
2. **Money factor is negotiable too.** Dealers can mark up the money factor (called "lease rate markup," similar to dealer reserve in financing). Always ask "what's the buy rate from the manufacturer captive lender?" Some captive lenders publish their rates publicly.
3. **Avoid large down payments on leases.** If the car is totaled or stolen, insurance pays the leasing company (not you) and your down payment is lost. Use down payments only to bring cap cost in line with vehicle value or to qualify for subvented rates. Otherwise, put nothing down beyond first-month payment.
4. **Watch the residual.** Subsidized residuals (artificially high) make leasing cheap and buying out at lease end unattractive. Low residuals (especially on traditionally low-residual vehicles) make leasing expensive. Compare residuals across competing vehicles in your category.
5. **Mileage limits matter.** Typical leases include 10K-15K miles/year. Excess miles are charged $0.15-$0.30 per mile at lease end. Driving 18K miles/year? You'll owe $2,500+ at lease end on a 36-month lease. Pay for higher mileage upfront ($0.10-$0.15/mile equivalent) if you know you'll exceed.
6. **Wear and tear standards are strict.** "Normal wear" is defined narrowly. Scratches, scuffs, interior wear, and minor dents can produce $500-$2,000 in end-of-lease charges. Consider lease-end inspection 60 days before return to address issues affordably.
7. **Early termination is brutal.** Breaking a lease typically requires paying remaining payments + early termination fee + difference between lease balance and vehicle value. Often $5,000-$15,000+ to exit early. Don't lease if uncertain about needing the vehicle for full term.
8. **Lease is most economical for short ownership.** If you actually plan to drive a vehicle 36-48 months and trade, leasing can be competitive with financing. If you plan to keep 5+ years, buying (especially used) is dramatically cheaper.
9. **GAP insurance matters.** Most leases include GAP coverage (covers difference between lease balance and insurance payout if vehicle is totaled). Verify it's included; if not, purchase separately.
10. **Disposition fee at end.** Most leases charge $300-$500 to return the vehicle at lease end. This fee is sometimes waived if you lease another vehicle from the same brand.
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Percentage of MSRP at lease end
Multiply by 2400 for equivalent APR
Monthly Payment
$540
Total Lease Cost
$21,448
Effective APR
4.80%
Residual Value
$22,000