AutoMath
Financing

Lease Payment Calculator

Build a lease payment the way the dealer does — depreciation plus the money-factor rent charge plus tax — and see exactly how much of every payment is interest.

Your numbersSaved on this device only
The car
The deal
Monthly payment

$397.98

$371.94 base + $26.04 tax · money factor ≈ 3.00% APR

What you're paying for
Of each payment, $305.97 is depreciation (value you use up) and $65.97 is the rent charge (interest). Over 36 months that's $2,375 in finance charges alone.
Residual value
$20,880MSRP × residual %
Adjusted cap cost
$31,895price + fee − reductions
Total of payments
$14,327
Total lease cost
$16,327payments + cash down

What this computes

A lease isn't a loan on the whole car — it's a loan on the part of the car you use up. This computes the monthly payment from the four numbers that actually drive it: the price you negotiate, the residual the bank assigns, the money factor (the interest rate in disguise), and the term. Then it splits the payment into the value you consume and the interest you pay to consume it.

The math

residual value    = MSRP × residual %
adjusted cap cost = price + fees − (down + trade + rebates)
depreciation fee  = (adjusted cap cost − residual) / term
rent charge       = (adjusted cap cost + residual) × money factor
base payment      = depreciation fee + rent charge
monthly payment   = base payment × (1 + sales-tax rate)

That last line is the US norm: most states tax the monthly payment, not the full price. And the money factor converts to a familiar number by multiplying by 2,400 — so 0.00125 is a 3% APR.

A lease payment hides the interest rate in a four-decimal number nobody reads. Multiply it by 2,400 and the deal stops being a mystery.

How to use this

  1. Negotiate the price, not the payment. Lower the negotiated cap cost and both the depreciation fee and rent charge fall.
  2. Convert the money factor. Ask for it as a decimal, multiply by 2,400, and compare that APR to what a loan would cost.
  3. Confirm the residual. It's set by the bank; a higher residual lowers your payment and is also the buyout price at the end.
  4. Try zero down. Set the down payment to $0 to see the true sign-and-drive cost — money down on a lease is at risk if the car is totaled.

The money-factor trap

  • It looks like nothing. 0.0025 reads as a rounding error; it's a 6% APR. The decimal exists to be unreadable.
  • It's marked up. Like a loan rate, the dealer can pad the money factor above the bank's buy rate. Converting to APR is how you catch it.
  • It applies to cap cost plus residual. Unlike a loan, you pay rent on the residual too — which is why a "cheap" lease on an expensive car still carries a real finance charge.

What this calculator doesn't model

  • Up-front sales-tax states — a few states tax the full price, not the payment.
  • Disposition and registration fees due at signing or turn-in.
  • Mileage limits — overage at lease-end is its own bill; size it with the lease mileage calculator.
  • Multiple security deposits that some banks let you trade for a lower money factor.

Frequently asked questions

What is a money factor and how does it relate to APR? +
The money factor is how leases express the interest rate. Multiply it by 2,400 to get the equivalent APR: 0.00125 × 2,400 = 3%. Dealers quote the tiny decimal precisely because most people can't read it — a money factor of 0.0025 sounds trivial but is a 6% APR. Always convert it.
What is the residual value? +
The residual is the car's predicted value at lease-end, set as a percentage of MSRP by the leasing bank. You're essentially paying for the depreciation — MSRP-minus-residual — over the term, plus interest. A higher residual means less depreciation to pay for, so a lower payment. It's also the price you'd pay to buy the car at the end.
How is a lease payment actually calculated? +
Two parts plus tax. The depreciation fee is (adjusted cap cost − residual) ÷ term. The rent charge (interest) is (adjusted cap cost + residual) × money factor. Add them for the base payment, then apply sales tax — in most US states, tax is charged on the monthly payment, not the whole car.
Should I put money down on a lease? +
Usually no. A down payment (cap-cost reduction) lowers the payment, but if the car is totaled or stolen early, you lose that cash — gap coverage repays the bank, not you. Most advice is to put as little down as possible on a lease and keep the cash. The calculator lets you set it to zero to see the true 'sign-and-drive' payment.
What's the difference between cap cost and adjusted cap cost? +
The gross capitalized cost is the negotiated price plus any capitalized fees (like the acquisition fee). The adjusted cap cost subtracts your cap-cost reductions — down payment, trade-in equity, and rebates. Depreciation and the rent charge are both computed from the adjusted cap cost, so negotiating the price down lowers the payment twice over.
Does this include taxes and fees? +
It applies sales tax to the monthly payment (the method most US states use) and lets you capitalize the acquisition fee. It does not model states that tax the full sale price up front, disposition fees due at turn-in, registration, or dealer add-ons. Treat the output as the financing core of the deal, not the out-the-door total.

Related calculators

New to the money factor? Read the money factor, explained and how a lease payment is built.

AutoMath is an educational tool. The numbers above depend entirely on the deal terms you enter and are not a financing offer.