At a glance
- Payment
- Depreciation plus rent charge, plus tax
- Money factor
- APR divided by 2,400
- Residual
- Usually 50% to 65% of MSRP for 36 months
- Cost
- Free, no signup
On this page
How a lease payment is worked out
A lease charges you for the part of the car you use up, plus a finance charge on the money tied up in the car. Every lease payment comes from the same three numbers.
Find the adjusted cap cost
Start with the price you agreed (the capitalized cost), add fees rolled in such as the acquisition fee, then take off your down payment, rebates and trade-in equity. That is the adjusted capitalized cost.
Take off the residual
The residual is what the leasing company expects the car to be worth at the end, set as a percent of MSRP. The adjusted cap cost minus the residual is the depreciation you pay off. Divide it by the months.
Add the rent charge
Add the adjusted cap cost and the residual, then multiply by the money factor. That is the monthly rent charge, the lease version of interest.
Add the tax
Most states tax each monthly payment. A few tax the whole price or every payment up front. Pick your state in the calculator and it uses that state's method.
A worked example
A $40,000 MSRP car leased at a $38,000 price for 36 months with nothing down, a $695 acquisition fee rolled in, a 58% residual and a 0.00250 money factor (6% APR):
- Adjusted cap cost: $38,000 + $695 = $38,695
- Residual: 58% of $40,000 = $23,200
- Depreciation: ($38,695 - $23,200) / 36 = $430.42 a month
- Rent charge: ($38,695 + $23,200) x 0.0025 = $154.74 a month
- Payment before tax: $585.15, and with 6% tax on each payment, $620.26
Type the same numbers into the calculator and you get the same answer.
Money factor and APR
Leases quote a money factor instead of an APR. Multiply it by 2,400 to get the APR it equals: 0.00250 is 6%. Divide an APR by 2,400 to go the other way. The calculator takes an APR and shows the money factor next to it, so you can check the number on the contract. The money factor calculator converts both ways.
Why the residual matters so much
A higher residual means less depreciation to pay, so the payment drops. Cars that hold their value lease for less. The residual is set by the leasing company and usually is not negotiable, but the price is. Every $1,000 off the price saves about $1,000 divided by the months, plus a little rent charge.
What you pay at signing
Due at signing is usually the first payment, the down payment (cap cost reduction), and fees not rolled in, such as registration and the dealer's doc fee. In states that tax a lease up front, the tax is due then too. Lease ads must show the total due at signing next to the payment, under the federal Consumer Leasing Act rules.
What money factor to expect
The credit chips fill in a starting APR. These are typical rates by credit score, not a quote. A bank, credit union or the dealer gives you the real one, and you can type it over ours.
| Credit | Scores | New car APR | Used car APR |
|---|---|---|---|
| Excellent | 720+ | 5.2% | 7% |
| Good | 660 to 719 | 6.9% | 9.7% |
| Fair | 600 to 659 | 9.9% | 14% |
| Rebuilding | Under 600 | 13.5% | 19% |
Starting rates the calculator fills in, rounded from the averages by credit band in Experian's auto finance reports. Your lender's quote is what counts: type it over these.