The formula
How it works
Estimate the monthly payment on a car lease from the price, the residual value and the money factor. A lease payment is built from two parts: depreciation, and a finance charge on the money factor.
FAQ
What is the money factor?
It is the interest rate on a lease, written as a small decimal. Multiply it by 2,400 to get the rough equivalent APR — so a money factor of 0.0025 is about 6%.
What is residual value?
It is what the car is expected to be worth at the end of the lease, set as a percentage of its price. A higher residual means less depreciation to pay for, which lowers your monthly payment.
What is the capitalized cost?
It is the negotiated price of the car minus any down payment or trade-in credit — essentially the amount you are financing over the lease. Lowering it, by negotiating price or adding a down payment, directly reduces your monthly depreciation charge.
Does a bigger down payment always lower the payment?
Yes, a larger down payment reduces the capitalized cost, which lowers both the depreciation and finance portions of the payment. Keep in mind that money is at risk if the car is totaled or stolen early in the lease, since gap insurance may not cover a large upfront payment.
Are taxes and fees included in this estimate?
No, this calculator focuses on the core lease math — depreciation and the finance charge from the money factor. Sales tax, acquisition fees, and other dealer charges vary by location and are not included, so your actual payment may be higher.
What happens at the end of the lease?
You typically return the car, walk away, or buy it for the residual value set at signing. If the car is worth more than the residual on the used market, buying it out can be a good deal.
Does mileage affect the lease payment shown here?
Not in this calculator — it assumes the residual value already reflects the agreed mileage allowance. In practice, choosing a lower annual mileage limit usually raises the residual value and can reduce the payment, while exceeding the limit adds fees at lease end.
About the lease calculator
This calculator estimates the monthly payment on a vehicle lease. Leasing works differently from buying: instead of paying off the whole car, you pay for the value it loses while you drive it — its depreciation — plus a finance charge. The payment therefore depends on the price you negotiate, how much the car is expected to be worth at the end (the residual), and the money factor, which is the lease’s version of an interest rate.
How to use it
Enter the negotiated price, any down payment, the residual value as a percentage, the money factor, and the lease term in months. The calculator returns the monthly payment, split into its depreciation and finance parts. For example, a $30,000 car with $2,000 down, a 55% residual, a 0.0025 money factor and a 36-month term works out to about $431 a month. A higher residual or lower money factor reduces the payment.
The formula
The monthly payment is , where is the capitalised cost (price minus down payment), is the residual value, is the term in months and is the money factor. The first term is the depreciation spread over the lease; the second is the finance charge, applied to the sum of the start and end values. Multiplying the money factor by 2,400 gives the equivalent APR.
Where it is used
Car shoppers use it to compare lease deals and to check that a quoted payment matches the price, residual and money factor being offered — numbers dealers do not always spell out. Understanding how the payment is built helps you negotiate: lowering the price or securing a better money factor both cut the monthly cost. It also makes leasing easier to compare against buying with a loan.