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Calculate and analyze your financial information.
Enter the terms of your lease agreement.
$636.06
Everything you need to know
Car leasing is essentially a long-term rental agreement. Instead of buying a car, you agree to use a vehicle for a fixed period (typically 2-4 years) and pay for its depreciation during that time, along with interest and fees. When the lease ends, you return the car to the dealership with no further obligation.
For many drivers, leasing offers advantages: predictable monthly payments, new car features and warranties, no long-term commitment, and the ability to drive a different car every few years. However, leasing also comes with limitations like mileage restrictions, wear-and-tear charges, and no equity or ownership. Understanding how lease payments are calculated empowers you to negotiate better deals and decide whether leasing is right for you.
Our auto lease calculator helps you understand the true cost of leasing:
Enter the Vehicle Price
Provide the Residual Value
Enter Your Down Payment
Specify the Lease Term
Provide the Money Factor (Interest)
Include Fees and Sales Tax
Review Your Monthly Payment
The monthly lease payment consists of three components:
Depreciation Charge = (Capitalized Cost - Residual Value) / Lease Term (in months)
This is the primary component of your payment—the vehicle's expected loss in value over the lease period.
Finance Charge = (Capitalized Cost + Residual Value) × Money Factor
The money factor is essentially an interest rate applied to the average amount financed during the lease.
Pre-Tax Payment = Depreciation Charge + Finance Charge
Final Monthly Payment = (Pre-Tax Payment + Fees) × (1 + Sales Tax Rate)
Lease Details:
Step 1: Calculate Depreciation Charge
Step 2: Calculate Finance Charge
Step 3: Calculate Total Pre-Tax Payment
Step 4: Apply Sales Tax
Total Cost Over 36 Months:
Same lease, different negotiations:
Conservative Negotiation:
Aggressive Negotiation (5% discount):
This shows why negotiating the capitalized cost matters more than negotiating other details.
3-Year Vehicle:
Option A: Lease at $450/month
Option B: Finance Purchase at $22,500 with $3,000 down
Lease advantage: Lower monthly payment, no depreciation risk Buy advantage: Ownership, no mileage limits, lower long-term cost if you keep car longer
Scenario: 36-month lease with 12,000-mile/year allowance
This shows why mileage estimates are critical when leasing.
$32,000 capitalized cost, 36-month lease
| Residual Value | Monthly Depreciation | Monthly Payment | 36-Mo Cost |
|---|---|---|---|
| 50% ($16,000) | $444 | $580 | $20,880 |
| 55% ($17,600) | $400 | $536 | $19,296 |
| 60% ($19,200) | $356 | $491 | $17,676 |
| 65% ($20,800) | $311 | $447 | $16,092 |
A 15% difference in residual value results in $4,788 difference over 3 years!
The negotiated price of the vehicle for leasing purposes. This is NOT the same as MSRP or the purchase price. You should actively negotiate this amount down, as every $1,000 reduces your monthly payment by approximately $25-30. This is where you can save the most money in a lease.
The estimated value of the vehicle at the end of the lease term, set by the leasing company based on expected depreciation. Higher residual values are better for lessees as they reduce depreciation charges. Some vehicles hold value better and have higher residual values (better lease values).
The finance charge, expressed as a decimal and multiplied by 2400 to get an APR equivalent. A lower money factor saves money. Typical money factors range from 0.00200 to 0.00400 (APRs of 4.8% to 9.6%). This is negotiable like an interest rate.
Most leases allow 10,000-15,000 miles per year. Exceeding this costs $0.15-0.30 per mile. If you drive more than 15,000 miles annually, buying may be better than leasing.
You're responsible for keeping the vehicle in good condition. Excess wear and tear charges can be $500-$3,000 at lease end. Normal wear is expected and shouldn't result in charges.
Usually included in leases, this covers the difference between what you owe if the car is totaled and what insurance pays. This is automatically built into lease payments (one advantage of leasing).
Disclaimer: This calculator provides an estimate for informational purposes only. Actual lease terms, fees, taxes, and payment calculations may vary significantly by dealership, location, manufacturer, and individual credit. Consult your lease agreement for actual terms.