A lease payment is depreciation plus a rent charge. Depreciation is (capitalized cost − residual value) ÷ months, and the rent charge is (capitalized cost + residual value) × money factor. With the defaults — $35,000 price, $2,000 down, $20,000 residual, 36 months and a 3.5% rate (money factor 0.001458) — that is $361.11 + $77.29 = $438.40 a month before tax. Multiply a money factor by 2,400 to get an approximate annual rate: 0.00125 is about 3.0%. Enter the rate as a percent in this tool.
This auto lease calculator estimates a monthly lease payment from MSRP, residual value, down payment, an APR style rate, and term months. It splits the payment into a depreciation portion and a finance portion using a simple money factor model.
Shoppers use it to sanity check a dealer quote before signing. It is an educational estimate, not a binding offer from a lender or manufacturer.
Payment formula
Capitalized cost (cap) equals MSRP minus down payment. Depreciation per month equals (cap minus residual) divided by months. Money factor mf equals apr/100/24. Finance charge equals (cap + residual) times mf. Monthly payment equals depreciation plus finance charge.
Worked example
MSRP $35,000, residual $20,000, down $2,000, rate 3.5 percent, term 36 months. Cap = 33,000. Depreciation = (33,000 – 20,000) / 36 ≈ $361.11. Money factor = 3.5/100/24 ≈ 0.001458. Finance ≈ (33,000 + 20,000) * 0.001458 ≈ $77.29. Payment ≈ $438.40.
| Input | Value |
|---|---|
| MSRP | $35,000 |
| Residual | $20,000 |
| Down | $2,000 |
| Rate | 3.5% |
| Months | 36 |
| Estimated payment | ~$438.40 |
How to use the fields
- MSRP is the vehicle sticker used in the worksheet.
- Residual is the end value the lessor assigns for this term and mileage band. Enter it in dollars; if a dealer quotes residual as a percent, multiply the percent by MSRP.
- Down reduces cap cost. Cap cost reductions from rebates can be reflected the same way if you know the net.
- Rate (%) — money factor × 2,400. It is entered as a percent and the tool converts it to a money factor.
- Months is the lease term, often 24, 36, or 39.
Money factor to approximate rate
| Money factor | × 2,400 ≈ rate |
|---|---|
| 0.00125 | 3.0% |
| 0.001458 | 3.5% (tool default) |
| 0.0015 | 3.6% |
| 0.0025 | 6.0% |
Sources: Capital One for the ×2,400 rule of thumb. The Federal Reserve’s More information about the rent charge shows rent charge = money factor × (adjusted cap cost + residual), for example .00354 × ($18,800 + $12,350) = $110.27, and notes the money factor “cannot be converted to a lease rate by moving the decimal point.” Under Reg M, 12 CFR 1013.4(s), leases are not required to disclose an APR, and any lease rate shown must carry the notice “This percentage may not measure the overall cost of financing this lease.” So treat the ×2,400 figure as an approximate rate, not an APR.
How each input moves the default payment
| Change from default | Monthly payment |
|---|---|
| Default (above) | $438.40 |
| $0 down | $496.88 |
| Rate 6% (MF 0.0025) | $493.61 |
| Residual $21,000 | $412.08 |
| 24 months | $618.96 |
These figures are before sales tax and fees; the tool does not add tax.
Reading a dealer quote
Match MSRP, residual percent or dollar residual, money factor or APR, and due at signing. If your quote payment differs a lot from this estimate, ask which fees, tax, and residual were used. Large gaps often come from acquisition fees or a different residual.
Capitalized cost reductions, first month, acquisition fee, and tax can pile into drive off cash. A low monthly payment with a heavy due at signing is a different deal than a slightly higher payment with little down. Enter the true down or cap reduction you will pay so the payment estimate matches cash you actually spend.
- Ask for MSRP, selling price, residual, money factor, term, and mileage.
- Ask which fees are capitalized versus due upfront.
- Re run this calculator after each worksheet change.
Lease versus loan
Leasing prices depreciation for a fixed term. Buying with a loan builds equity if the car holds value. For amortizing loan payments, use the loan calculator or the auto loan calculator and compare total cash over the same years carefully. For a generic lease, see the lease calculator.
Common mistakes
- Comparing payments without matching mileage allowances
- Ignoring tax on payment or on cap cost reductions
- Using residual dollars that do not match the term
- Forgetting disposition or early termination fees at the end
Limitations
Wear charges, gap insurance, and state tax rules are not included. Mileage overages, excess wear, and disposition fees at turn in can erase the feeling of a cheap lease, so keep them in a separate worksheet. Confirm numbers on the official lease worksheet before you sign.