🚗 Car Lease Calculator
Estimate a monthly car lease payment and see how depreciation, the finance charge and tax add up.
Quick answer: A lease payment is depreciation plus a finance charge plus tax. For a $35,000 car (MSRP $38,000) with $3,000 down, a 58% residual, 6% APR (0.0025 money factor), 36 months and 7% tax, the payment is $440.59 a month.
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Car Lease Calculator inputs
Result
Monthly lease payment
$440.59
for 36 months, including 7% tax
| Depreciation | $276.67 |
| Finance charge (rent) | $135.10 |
| Sales tax | $28.82 |
| Monthly payment | $440.59 |
- Adjusted cap cost
- $32,000.00
- Residual value
- $22,040.00
- Money factor
- 0.0025
- Equivalent APR
- 6%
- Total lease cost
- $18,861.24
How a lease payment is calculated
When you lease, you pay for the part of the car’s value you use up during the term, plus a finance charge for the lender’s money tied up in the car. Tax is then added to the payment in most US states.
Depreciation = (Cap cost − Residual) ÷ Term · Finance charge = (Cap cost + Residual) × Money factor · Payment = (Depreciation + Finance) × (1 + Tax rate)
Money factor = APR ÷ 2,400. The adjusted capitalised (cap) cost is the negotiated price minus your down payment and trade-in.
Worked example
- MSRP $38,000, negotiated price $35,000, $3,000 down → cap cost $32,000
- Residual 58% of MSRP → $22,040
- Depreciation: ($32,000 − $22,040) ÷ 36 = $276.67
- Finance charge: ($32,000 + $22,040) × 0.0025 = $135.10
- Tax at 7%: $28.82 → $440.59 a month
How to get a better lease deal
- Negotiate the price, not the payment – the cap cost drives depreciation.
- Ask for the buy rate money factor; dealers can mark it up. Check it against the APR you would get on a loan.
- Choose models with high residuals, which hold their value and cost less to lease.
- Know the extra fees: acquisition and disposition fees, excess mileage (often $0.15–$0.30 a mile) and wear-and-tear charges.
- Match the term to the warranty so you are not paying for repairs on a car you do not own.
Fees and tax rules vary by state and lender, so use this as an estimate and compare it with the dealer’s itemised worksheet.
Estimates for educational purposes, not financial or tax advice.
Frequently asked questions
What is a money factor?
It is the lease equivalent of an interest rate, quoted as a small decimal. Multiply it by 2,400 to get the approximate APR: a money factor of 0.0025 is about 6% APR.
What is a residual value?
The car’s estimated value at the end of the lease, set by the lender as a percentage of MSRP. A higher residual means less depreciation to pay for and a lower monthly payment.
Is it worth putting money down on a lease?
A down payment lowers the monthly payment, but if the car is written off early, insurance (and gap cover) typically pays the lender, not you – so the down payment can be lost. Many advisers suggest putting little or nothing down.
How is sales tax charged on a lease?
In most US states tax is charged on each monthly payment, as this calculator assumes. A few states, such as Texas, tax the full price of the car up front, and some tax the down payment too.