Leasing a car looks simple on the dealer's tablet — one monthly number, a few hundred dollars down, and you drive home. But that single number hides three separate pieces: how much the car is expected to lose in value (depreciation), the interest-like finance charge the bank tacks on (the rent charge), and your local sales tax. This lease calculator breaks each piece out so you can compare offers honestly, negotiate with confidence, and avoid the surprises that usually show up at the finance desk.
Type in the negotiated price, the residual value the lease bank quotes, the term, and the money-factor APR. Every figure below updates instantly. You will see the monthly depreciation, the monthly rent charge, the pre-tax payment, the tax, and the total monthly out-of-pocket — plus the grand total you will have paid by lease-end.
How to Use
- Enter the Negotiated Price — the price you actually agreed to pay the dealer, before tax, title, and fees. This is gross capitalized cost. Do not use MSRP unless you paid MSRP.
- Set the Residual Value as a percentage of MSRP. The lease bank sets this; it is usually 50%–65% for a 36-month lease. A higher residual means less depreciation you pay for.
- Choose the Lease Term — 24, 36, 39, or 48 months. Longer terms lower the monthly payment but raise total interest.
- Type the Money Factor APR. If the dealer quotes a money factor like 0.00095, multiply by 2,400 to get the APR (0.00095 × 2,400 = 2.28%). This calculator takes APR directly.
- Add a Down Payment (also called capitalized cost reduction) if you plan to put cash, trade-in equity, or a rebate toward the lease. Zero is fine — most leases can be signed with nothing due at signing.
- Set your Sales Tax Rate. In most states you pay tax only on the monthly payment, not on the full vehicle price, which is one of the quiet advantages of leasing.
The result card splits the payment into depreciation (the value the car loses), the rent charge (the lease bank's fee), and tax — then shows the total monthly payment and the total dollars you will hand over across the whole lease.
The Lease Payment Formula
US closed-end leases use the money-factor method, the same math required by the FTC's Consumer Leasing Act:
Monthly Payment = (Depreciation + Rent Charge) × (1 + Tax)
Where:
- Monthly Depreciation = (Net Cap Cost − Residual Value) ÷ Term Months. This is the value the car is expected to lose while you drive it.
- Monthly Rent Charge = (Net Cap Cost + Residual Value) × Money Factor. The money factor is the APR divided by 2,400. Notice that the finance charge is levied on the sum of the start and end values — not on a declining balance like a car loan.
- Net Cap Cost = Negotiated Price − Down Payment − Rebate − Trade-in Equity.
Worked example on a $35,000 car with a 55% residual ($19,250) over 36 months at 6.0% APR, no down, 7% tax: depreciation is $15,750 ÷ 36 = $437.50, the rent charge is ($35,000 + $19,250) × 0.0025 = $135.63, the pre-tax payment is $573.13, tax adds $40.12, and the total monthly payment is $613.24. Over 36 months you will pay about $22,077 in total — and you will walk away at lease-end with no car.
If the APR is 0%, the rent charge disappears entirely and the payment is pure depreciation. That is why "0% lease APR" ads sound so attractive — the finance piece vanishes, but the depreciation piece (usually the larger half) does not.
What Moves Your Payment
Three numbers dominate your monthly bill, and the dealer controls how they are presented:
- Negotiated price still matters. Because leases charge you for depreciation, haggling the price down by $1,000 saves you roughly $28 per month over 36 months — plus a small knock on the rent charge. The myth that "lease customers do not negotiate price" is exactly what dealers want you to believe.
- Residual is set by the bank, not the dealer. A high residual (60%+) makes the monthly look tiny and is the main reason luxury cars and EVs often lease cheaply. A low residual kills the deal.
- Money factor is the dealer's hidden profit. A "good" lease money factor is often 0.0007–0.0015 (1.7%–3.6% APR). A bad one can be 0.0030 (7.2% APR). Ask for the money factor in writing; if the dealer refuses, that is your answer.
Examples
Example 1 — The default commute. A $35,000 sedan, 55% residual, 36 months, 6.0% APR, $0 down, 7% tax. The monthly payment lands near $613. Half of that is depreciation, a quarter is finance, and an eighth is tax. Use this as your sanity check before comparing any quoted deal.
Example 2 — The zero-down luxury lease. A $60,000 SUV with a 62% residual ($37,200) over 36 months at 4.9% APR, $0 down, 6% tax. Depreciation is $22,800 ÷ 36 = $633.33; rent charge is ($60,000 + $37,200) × 0.002042 = $198.46; pre-tax $831.79; tax $49.91; total ≈ $881.70/month. The high residual is what makes a $60k SUV feel affordable — for three years.
Example 3 — Stressing a seven-figure exotic. A $1,000,000 hypercar with a 50% residual over 36 months at 5.0% APR, no tax. Depreciation is $500,000 ÷ 36 = $13,888.89; rent charge is $1,500,000 × 0.002083 = $3,125; the monthly payment is $17,013.89. This calculator handles luxury and fleet-scale inputs without rounding errors.
Example 4 — Down payment help. On a $45,000 car, 52% residual, 39 months, 7.2% APR, $3,000 down, 6.25% tax. Net cap cost drops to $42,000; residual is $23,400; monthly depreciation is $476.92; rent charge is $196.20; pre-tax $673.12; tax $42.07; total ≈ $715.19/month.
FAQ
How is a car lease monthly payment calculated?
The payment is the sum of monthly depreciation and the monthly rent charge, plus sales tax. Depreciation is (negotiated price minus residual value) divided by the number of months. The rent charge is (net cap cost plus residual) times the money factor, where money factor equals APR divided by 2,400. This is the formula required by the FTC's Consumer Leasing Act and used by every US captive lease company.
What is the money factor and how do I convert it to APR?
The money factor is a decimal the lease bank uses instead of a percentage rate. Convert it to an APR by multiplying by 2,400. For example, a money factor of 0.00095 is 2.28% APR, and 0.00250 is 6.00% APR. Dealers often quote the money factor because it sounds smaller than an interest rate.
Is it better to lease or buy?
Leasing wins if you want a lower monthly payment, a new car every 2–4 years, and no trade-in hassle at the end. Buying wins if you drive more than 15,000 miles a year, keep cars past five years, or hate the idea of paying for depreciation you never benefit from. Lease deals can be dramatically cheaper in monthly terms but leave you with no asset at the end.
Do I pay sales tax on the whole car when I lease?
In most US states, no. You pay sales tax only on your monthly lease payment, which is usually rolled into the payment itself. A few states (such as Texas) charge tax on the full negotiated price up front. Enter your local rate above; if your state taxes the full price, add that lump sum to the down payment field instead.
What residual value is good for a lease?
A residual of 55%–65% after 36 months is strong; below 50% is weak. Residuals vary by car, brand, and term. Luxury sedans and certified EVs often post residuals above 60%, while domestic trucks and performance cars can sit in the low 40s. A higher residual directly lowers your depreciation charge.
How much should I put down on a lease?
As little as possible. Because you do not own the car, a large down payment is money you cannot recover if the car is totaled or stolen — the insurance payout goes to the lease bank, not to you. Most advisers recommend $0–$2,000 at signing and keeping the rest in savings.
What happens at the end of a lease?
You return the car, pay any excess mileage and wear-and-tear fees, and walk away. You can also buy the car at the price written into your original lease contract (the residual), or roll the equity into a new lease. Always inspect the car yourself and negotiate the disposition fee before signing.
Disclaimer
This car lease calculator is provided for informational purposes only and does not constitute financial, lending, or tax advice. Estimates use the standard US money-factor lease formula and exclude acquisition fees, disposition fees, registration, title, gap insurance, and excess-mileage charges. Actual lease offers vary by bank, credit score, region, and negotiation. Always confirm your final payment, money factor, and residual in writing with the dealer or lease bank before signing a contract.