Car Lease Calculator

A car lease payment equals monthly depreciation plus a finance (rent) charge plus sales tax. Lease a car with a $40,000 MSRP negotiated to $37,000 (57% residual, 0.0025 money factor, $2,000 down, 7% tax on the payment) for 36 months and you pay about $517/month: roughly $339 depreciation, $145 finance charge, and $34 tax. Those are the values loaded above; the residual and money factor are example assumptions, since neither is published as a market average. This calculator splits every dollar so you see exactly where to negotiate.

Leasing is only one way to get into a car. If you plan to own the vehicle, price it as a purchase with our Auto Loan Calculator or Car Payment Calculator; for any fixed-rate borrowing use the general Loan Calculator, and for unsecured financing that is not tied to the car use the Personal Loan Calculator. This page, an auto lease calculator for any car, SUV or pickup, answers the narrower question of what a lease costs each month.

How a lease payment is calculated

Unlike a loan, a lease charges you for the part of the car's value you use up (the depreciation) plus rent on the money. The monthly payment is the sum of three pieces:

where:

The finance charge surprises people because it is based on the cap cost plus the residual, not just the amount you are using. That is because you are paying rent on the money the lessor has tied up in the whole car, which averages (cap cost + residual) ÷ 2 over the lease. The money factor works like an interest rate: multiply it by 2,400 for an approximate APR, so 0.0025 is about 6%.

Money factor to APR conversion chart

To compare a lease rate against a loan APR, multiply the money factor by 2,400 (an approximation). The finance-charge column below assumes an adjusted cap cost plus residual of $57,800 (the default example), so you can see how each rate tier changes the monthly rent charge.

A worked example, step by step

Using the default numbers above:

• Residual = $40,000 × 57% = $22,800.
• Adjusted cap cost = $37,000 − $2,000 down − $0 trade = $35,000.
• Depreciation = ($35,000 − $22,800) ÷ 36 = $338.89/mo.
• Finance charge = ($35,000 + $22,800) × 0.0025 = $144.50/mo.
• Base payment = $338.89 + $144.50 = $483.39/mo.
• Sales tax = $483.39 × 7% = $33.84/mo, for a total of $517.23/mo.

That is the entire math behind your lease. Every figure the dealer quotes you traces back to one of these inputs, which is exactly why knowing them gives you leverage.

How much does it cost to lease a car per month?

These are computed base payments (before sales tax) with the car leased at its full MSRP, zero down, a 0.0025 money factor (about 6% APR), and example residuals of 62% at 24 months, 57% at 36 months and 48% at 48 months. Real residuals vary by model, term and mileage allowance. In most states you then add tax on each monthly payment.

Notice that a longer term lowers the monthly payment because the depreciation is spread over more months, but you pay rent for more months, so the total of payments rises: on the $40,000 car, about $19,088 over 24 months versus $27,904 over 48 months.

How to use this car lease calculator

You only need the numbers from a lease worksheet to get a realistic estimate. Work through the fields in order:

1. MSRP: the sticker price. The residual percentage is applied to this number, so use the full window-sticker MSRP, not the discounted price.
2. Negotiated price: the selling price you agree to (the agreed-upon value on the lease disclosure). This is the most negotiable input.
3. Residual value (%): the leasing company's predicted end-of-lease value as a percent of MSRP. Ask the dealer or check the manufacturer's lease program.
4. Money factor: the lease rate from your quote, entered as a decimal such as 0.0025. The calculator shows the approximate APR next to it (money factor × 2,400).
5. Lease term: choose 24, 36, 39 or 48 months.
6. Down payment & trade-in: any cap-cost reduction lowers the adjusted cap cost, and therefore both depreciation and the finance charge.
7. Sales tax (%): your state or local rate. The calculator taxes each monthly payment, the method most states use. If your state collects the tax up front or does not tax lease payments, see the limitations below.

The results update as you type: read the monthly payment at the top, then scroll the breakdown to see depreciation, finance charge and tax both per month and across the whole term.

Who this calculator is for

• Shoppers comparing lease deals who want to check a dealer's quoted payment against the underlying math.
• Negotiators testing how much a lower price, a base money factor, or a stronger residual would save each month.
• Lease-vs-buy deciders who want a clean monthly number to set against an Auto Loan Calculator estimate.
• Budgeters who need the true monthly cost, including tax, before they sign.
• Anyone handed a confusing lease worksheet full of unfamiliar terms like cap cost, residual and money factor.

Key lease terms explained

• Capitalized (cap) cost: the price being financed in the lease, basically the negotiated vehicle price.
• Cap-cost reduction: anything that lowers the cap cost up front: your down payment, trade-in allowance or a rebate.
• Adjusted (net) cap cost: the cap cost after those reductions; the number the payment is actually built on.
• Residual value: the predicted end-of-lease value, set by the lessor and often quoted as a percent of MSRP. Higher is better for you.
• Money factor: the lease rate used to compute the rent charge; multiply by 2,400 for an approximate APR.
• Depreciation: the value the car loses while you drive it, usually the biggest part of the payment.
• Purchase option price: the price stated in your lease for buying the car at lease end, plus any purchase option fee.

Scenario A: lease with zero down

Take a $35,000 car negotiated to $33,000, a 55% residual, a lower 0.0020 money factor (about a 4.8% APR), 36 months, nothing down and 6% tax. The residual is $19,250 and, with no cap-cost reduction, the adjusted cap cost stays at $33,000. Depreciation is about $381.94/mo, the finance charge about $104.50/mo, and after tax the payment lands near $515.63/mo, roughly $18,563 over the full term with no cash up front. Compared with the default example, a $4,000 lower price and a lower money factor bring the payment to about the same level without the $2,000 down payment.

Scenario B: a pricier car with money down

Now a $50,000 vehicle negotiated to $47,000, a 60% residual, a 0.0030 money factor (about a 7.2% APR), 36 months, $3,000 down and 8% tax. The residual is $30,000 and the adjusted cap cost drops to $44,000. Depreciation is about $388.89/mo, the finance charge about $222/mo, and the after-tax payment is roughly $659.76/mo. Counting the $3,000 down, the total lease cost is around $26,751. The higher money factor means $7,992 in rent over three years, which is why shaving the money factor matters as much as the price.

What changes the lease payment the most

If you adjust the inputs and watch the payment move, a few levers dominate:

• Negotiated price: the most controllable lever, because it lowers both depreciation and the finance charge.
• Residual value: a higher residual means less depreciation; even a few points changes the payment a lot.
• Money factor: directly sets the finance charge; ask what rate the leasing company set and compare quotes.
• Term length: a longer lease spreads depreciation over more months but adds finance charges.
• Down payment & trade-in: lower the monthly payment but tie up cash you can lose if the car is totaled early.
• Sales tax rate: small per month but compounds across the term and varies widely by state.

How residual value changes the payment

The residual is the single biggest hidden lever. Below, the same car (a $35,000 adjusted cap cost on a $37,000 MSRP, 0.0025 money factor, 36-month term, zero down) is priced across residual percentages. A higher residual means less depreciation, so the base payment falls even though nothing else changes.

Going from a 45% to a 65% residual cuts the base payment by about $187/month on the identical selling price, which is why two cars at the same price can lease for very different amounts.

Tips to get a lower lease payment

• Negotiate the cap cost first, just as you would the price of a car you buy.
• Ask what money factor the leasing company set; dealer-arranged rates can include dealer compensation, and on the default example a 0.0005 difference is $28.90 a month, about $1,040 over 36 months before tax.
• Choose a car with a high residual: models that hold value lease cheaply even when their price is high.
• Put little or nothing down and pay slightly more per month rather than risk losing a large up-front sum.
• Match the mileage allowance to how you drive; do not overpay for miles you will not use.
• Stack manufacturer lease incentives, which act as cap-cost reductions or subsidized money factors.

Lease vs. buy, in one paragraph

A lease usually has a lower monthly payment than financing the same car over the same term, because you only pay for the depreciation during your term rather than the whole vehicle. The trade-off is that you build no equity, you face mileage limits and end-of-lease fees, and you start over when the lease ends. Buying costs more each month but the car is yours, and once a loan is paid off you can drive for years with no payment. If your priority is the lowest payment and always having a newer car, leasing wins; if it is the lowest total cost over many years, buying and keeping the car can cost less. Run both with our Auto Loan Calculator and Car Payment Calculator before deciding.

Limitations and assumptions

This calculator is a planning estimate, not a lease quote. Keep these in mind:

• It taxes only the monthly payment, the method most states use. Depending on your state, tax can also be due at signing (for example on a down payment); New York collects tax on all lease payments at the start of the lease, and Texas taxes the leasing company's purchase price instead of the payments.
• It excludes acquisition (bank) fees, disposition fees, registration and the first payment typically due at signing.
• It does not model excess-mileage or wear-and-tear charges, which are settled when you return the car.
• It shows the payment during the lease, not the purchase option price if you choose to buy the car at the end.
• Your actual money factor and residual depend on the lessor, your credit and the specific program, so confirm them on the dealer's worksheet.

How it compares to related calculators

This page answers "what is my monthly lease payment?" If your question is different, a sister tool fits better:

• To finance a car you intend to own, use the Auto Loan Calculator or the Car Payment Calculator.
• For any fixed-rate borrowing, use the general Loan Calculator.
• To compare unsecured borrowing, use the Personal Loan Calculator.
• To plan paying down balances, use the Credit Card Payoff or Debt Payoff calculators.

Lease vs. finance: a side-by-side cost comparison

The fairest way to judge a lease is to price the exact same car as a loan and compare the cash that leaves your account. Take the $37,000 negotiated car from the default example. Lease it for 36 months at a 0.0025 money factor with $2,000 down and you pay about $517/month including tax, or roughly $20,620 in cash over three years, but at the end you own nothing and hand the keys back. Finance the same $35,000 (after the same $2,000 down) over 60 months at 7.54%, the Federal Reserve's average commercial-bank rate for a 60-month new-car loan in August 2026, on our Auto Loan Calculator and the payment is about $702/month before any sales tax on the purchase. That loan looks more expensive month to month, but after 36 months you owe about $15,594 on a car the lessor itself expected to be worth $22,800 (the residual) at that point.

That equity is the crux of the decision. With a lease, every dollar is consumed: you rent the depreciation and walk away. With a loan, part of each payment buys ownership you can later sell, trade, or drive payment-free once the note is retired. The break-even depends on how long you keep the car: drivers who swap vehicles every two to three years never reach the payment-free years that make buying pay off, while drivers who keep a car well past the loan's payoff date get years without a car payment, which a lease never offers. Mileage habits matter too: a heavy commuter who would blow past a 12,000-mile lease allowance and rack up excess-mileage charges may be better off owning, where miles only affect resale value, not a per-mile charge. Run the same vehicle through both this page and the Car Payment Calculator before you commit; the right answer is the one that fits your time horizon and driving, not the lowest sticker payment.

Reading a dealer lease worksheet

When a dealer hands you a lease worksheet, the numbers on it map directly onto this calculator's inputs; they are just labelled in industry shorthand. Federal rules (Regulation M) require the lease disclosure to show the gross capitalized cost, capitalized cost reduction, adjusted capitalized cost, residual value, depreciation and the rent charge in dollars, but not a money factor or lease rate. The gross capitalized cost is your negotiated price plus anything rolled into it, such as an acquisition fee; the capitalized cost reduction lumps together your down payment, net trade-in allowance and any rebates; subtract one from the other and you have the adjusted (net) capitalized cost the payment is built on. The residual is shown as a dollar figure rather than a percent: divide it by the MSRP to recover the percentage this tool uses. The money factor may not be printed at all or may be quoted as a "lease rate"; ask for it, and if you only see a rate, divide it by 2,400 to get the money factor. You can also back it out from the disclosed rent charge: monthly rent charge ÷ (adjusted cap cost + residual). Ask whether the rate includes a dealer markup, and watch for fees such as the acquisition fee rolled into the cap cost, because rolling a fee into the cap cost means you also pay rent charge on it. If a worksheet's monthly payment does not match what this calculator shows for the same inputs, the gap usually comes from a fee rolled into the cap cost, a different money factor or residual, or the way your state taxes the lease, which is exactly the kind of thing worth questioning before you sign.

Sources & further reading

• Federal Reserve Board: Vehicle leasing: frequently asked questions (rent charges, no required lease rate, mileage limits, nonrefundable cap cost reduction, gap coverage).
• Federal Reserve Board: Leasing vs. buying: monthly payments and up-front costs (payment components, taxes on the payment and at signing).
• Federal Reserve Board: Sample lease disclosure form (amount due at signing, disposition fee, purchase option, excess-mileage charge).
• Consumer Financial Protection Bureau: Regulation M, 12 CFR 1013.4: content of lease disclosures.
• Federal Trade Commission: Financing or Leasing a Car.
• Consumer Financial Protection Bureau: How does a lender decide what interest rate to offer me on an auto loan? (dealer compensation on dealer-arranged rates).
• New York State Department of Taxation and Finance: Publication 839, sales tax on long-term motor vehicle leases.
• Texas Comptroller: Motor Vehicle Tax Guide: leases.
• Federal Reserve Board: Consumer Credit G.19, terms of credit (60-month new-car loan rate, August 2026).