Auto Lease Calculator
Estimated Monthly Payment: $0.00
Gross Capitalized Cost:
$0.00
Residual Value:
$0.00
Monthly Depreciation:
$0.00
Monthly Rent Charge:
$0.00
Total Lease Cost:
$0.00
Understanding the Auto Lease Calculation
Calculating an auto lease is significantly different from calculating a standard car loan. While a loan pays off the entire value of the vehicle over time, a lease only pays for the depreciation that occurs during the time you drive it, plus a finance fee called the Money Factor.
Key Terminology for Leasing
- Gross Capitalized Cost: The total price of the vehicle, including the negotiated price plus any added fees or taxes rolled into the lease.
- Capitalized Cost Reduction: This is the sum of your cash down payment, trade-in equity, and any manufacturer rebates. It reduces the amount being financed.
- Residual Value: This is the estimated value of the car at the end of the lease term. It is usually set by the bank as a percentage of the MSRP.
- Money Factor: This represents the interest rate. To convert a Money Factor to a standard APR, multiply it by 2400. For example, a money factor of 0.0025 equals a 6% APR.
The Math Behind Your Payment
The monthly lease payment consists of three primary parts:
- Depreciation Fee: (Net Cap Cost – Residual Value) / Lease Term
- Rent Charge: (Net Cap Cost + Residual Value) × Money Factor
- Sales Tax: (Depreciation Fee + Rent Charge) × Local Tax Rate
By understanding these variables, you can negotiate better lease terms. Focus on reducing the negotiated sales price and ensuring the Money Factor isn't being marked up by the dealership.