How much will my auto lease payments be?
Whether you know a lot or very little about leasing a car, this calculator will help you figure out the lease payments and more. The help text for each field is especially good if you’re worried about more than just the monthly payment amount. Move your cursor over any field prompt or click the question mark help icon to get lots of great information about leasing vehicles. Use the web links that go to websites and look up accurate values for all the unfamiliar numbers and terms involved in leasing. That way you’ll get an accurate lease payment calculation and you can go talk with a dealer well-prepared and ready to deal.
Title: A title for these calculator results that will help you identify it if you have printed out several versions of the calculator.
Vehicle or Leasing Co. Name: The vehicle name or the name of the leasing company. This field is not required but may help if you have printed out several loan scenarios.
Vehicle MSRP: The Manufacturer’s Suggested Retail Price (not the price you hope to pay) for the vehicle you want to lease or buy. Click the link icon (), if available, to bring up a website and look up the MSRP. It’s important to have an accurate MSRP when leasing because ‘Residual Value’ is based on MSRP, not the price you actually pay.
Negotiated Price: Also known as base capitalized (or cap) cost. The price you have negotiated (or hope to negotiate) for the vehicle you want to lease. Lease prices are negotiable just as new car prices are, and if your dealer or salesman tries to tell you price is not negotiable when leasing, find a new dealer! ‘Negotiated Price’ has the biggest influence when calculating your monthly payment. A good starting point for negotiating a vehicle price is to know the vehicle’s invoice price, then offer something reasonable above that. Reasonable offers might be $300-$500 over invoice for vehicles with an MSRP up to $25,000, $500-$1,000 over invoice for vehicles up to $40,000 MSRP, and $2,000-$3,000 over invoice for vehicles over $40,000 MSRP. Use the link icon (), if available, to bring up a website and look up the invoice price (it may even show an average price that buyer’s of this car are actually paying).
Down Payment: Any cash amount you plan to apply as a down payment to reduce your loan or lease amount.
Trade-In Value: Any vehicle trade-in amount you plan to apply as a down payment to reduce your loan or lease amount.
Dealer Rebate: Any dealer (or manufacturer) rebate or matching down payment amount you plan to apply as a down payment to reduce your loan or lease amount.
Other Reductions: Any other amount that would become part of the down payment to reduce your lease or loan amount.
Total Cost Reductions: Also known as capitalized cost (or cap cost) reduction. Enter the total of any costs that will reduce the lease or loan amount, like down payment, trade-in value, and dealer rebate. Click the ‘+’ icon for this section to expand the detail and let you enter values for individual reductions.
Trade-In Loan Balance: Any unpaid loan balance you still owe on the vehicle you intend to trade in.
Tags/Plates: The cost to purchase or transfer tags or license plates for your new vehicle.
Title Fee: The cost to have the title of your new vehicle transferred to its new owner (probably the leasing company or lender).
Registration Fee: The fee charged by your state and/or county to have your new vehicle legally registered.
Lease Acquisition Fee: Lease only: Sometimes called a bank fee. An administration fee (usually $250-$900) set and charged by the lease company, similar to points for a mortgage loan. High-end luxury vehicles have higher acquisition fees. It is becoming more common and is standard practice for some dealers to increase this fee themselves to increase their profit margin. If you don’t see this fee mentioned in your lease contract ask about it specifically. If it’s out of the normal range ($250-$900) it has probably been increased by the dealer and you may be able to negotiate it lower.
Insurance Costs: This amount will normally be blank (or zero) since you probably will pay for auto insurance directly to the insurance company.
Lease: If your lease does not include gap protection or gap insurance, (most recent lease contracts do include this, but be sure to read the fine print), you should request it and enter that additional cost here. Gap protection covers any additional amount you may still owe, beyond what your insurance company pays, in the case of a totaled or stolen vehicle under lease. It is strongly recommended and very important for any leased vehicle to have gap protection coverage.
Extended Warranty: If you have chosen coverage through an extended warranty, and that premium is to be financed into your lease or loan, enter the cost here.
Other Costs: Any other amount (i.e. up-front sales tax or a luxury tax amount) that would become part of the financed costs, increasing your lease or loan amount.
Total Financed Add-on Costs: Enter the total of any costs that will increase the lease or loan amount, like trade-in balance, tags/plates, title, registration, lease acquisition fee, insurance costs, and extended warranty. Click the ‘+’ icon for this section to expand the detail and let you enter values for individual add-on costs.
Length of Lease: Also known as lease term. How long you plan to keep the leased vehicle. Also choose whether ‘Length of Lease’ is years or months.
Money Factor: Sometimes called lease factor. The money factor is the way interest is charged for leases. The money factor is expressed as a very small decimal number, like .00259. Don’t confuse money factor with interest rate, as some dealers intentionally try to do. A money factor of .00259 is not an interest rate of 2.59%! However, money factor is directly related to the interest rate you will pay. In fact, you can estimate the interest rate by multiplying the money factor by 2400 (always use 2400 no matter what the ‘Length of Lease’ is). So a money factor of .00259 x 2400 = 6.21% as an approximate annual interest rate. If you don’t know your lease’s money factor, leave ‘Money Factor’ blank and enter ‘New Car Interest Rate’ instead and the money factor will be calculated for you or click the link icon (), if available, to bring up a website and look up the money factor for your car.
New Car Interest Rate: If you don’t know the money factor for your car, enter the current interest rates for new car purchases and ‘Money Factor’ will be estimated by dividing the interest rate by 2400. If the new car interest rate is 6.99%, divide that by 2400 = money factor of .00291. You can look up current new car interest rates on the web. Click the link icon (), if available, to bring up a website and look up the current auto loan interest rates.
Residual Value: The wholesale value of a car at the end of the lease. Residual value is really what makes lease payments less than typical auto loan payments. The best cars to lease have a 24 month residual value of at least 50%. (Vehicle residual values vary greatly so make sure you look it up.) With a lease you essentially pay for the anticipated depreciation amount of the car over the ‘Length of Lease’ plus interest and sales tax, then you give the car back or pay ‘Residual Value’ and buy it. Residual values are often stated only as a percentage of MSRP. If you see your residual value stated as a percentage, leave ‘Residual Value’ blank and enter the percentage in the ‘Percent of MSRP’ field, then residual value will be calculated for you. If you need to look up the residual value or percentage, click the link icon (), if available, to bring up a website and look up the vehicle’s residual value or percentage.
Percent of MSRP: The percent of MSRP the car is worth at the end of the lease. Residual values are often stated only as a percentage of MSRP, so if you know the percentage enter it here and ‘Residual Value’ will be calculated. You can look up residual values or percentages by clicking the ‘Residual Value’ link icon (), if available, to bring up a website and look up the vehicle’s residual value or percentage.
Sales Tax %: Sometimes called usage tax. The percentage of sales tax your state charges on leased vehicles. Also, if your state has a maximum amount of sales tax on vehicles, enter that amount as the ‘Maximum Sales Tax’. Sales tax on auto leases can get very complicated and varies from state to state. This calculator uses the most common method of calculating auto lease sales tax, which is to apply the sales tax percentage to the ‘Monthly Depreciation Fee’ + ‘Monthly Lease Fee’ and include sales tax in each monthly payment. Note: If your state charges sales tax up front on vehicle leases, include that amount in ‘Financed Add-on Costs’ and leave ‘Sales Tax’ percent and maximum blank.
Sales Tax Maximum: If your state has a maximum amount of sales tax on vehicles, enter that amount here. If the ‘Sales Tax’ percentage goes over this ‘Maximum’ amount, the maximum sales tax will be divided by the number of lease payments and the resulting amount will be included in each monthly payment.
Total Cost Reductions: Also known as capitalized cost (or cap cost) reduction. Total of the above ‘Cost Reductions’. Only include amounts that will reduce the lease or loan amount. Click the ‘-‘ icon for this section to collapse the detail and just enter a lump sum value for ‘Total Cost Reductions’.
Total Financed Add-on Costs: Total of the above ‘Financed Add-on Costs’. Only include amounts that will increase the lease or loan amount, do not include amounts you will pay as part of up-front costs. Click the ‘-‘ icon for this section to collapse the detail and just enter a lump sum value for ‘Total Financed Add-on Costs’.
Net Capitalized Cost: Your lease amount. The negotiated price minus cost reductions plus financed add-on costs gives the actual lease amount.
Monthly Lease Payment: Your monthly lease payment, made up of the depreciation fee, lease fee, and sales tax.
Monthly Depreciation Fee: Each month you pay an equal portion of the total expected vehicle depreciation. The depreciation fee is to pay the leasing company for the vehicle’s loss in value over the length of the lease.
Monthly Lease Fee: Sometimes called finance fee. The portion of your monthly payment that covers the lease fee. The lease fee is the way the leasing company charges interest for the use of their money. However, the lease fee is not amortized as interest is in a traditional loan. The formula has been simplified then figured into each payment equally throughout the lease.
Monthly Sales Tax: The amount of sales tax you pay each month. Sales tax is paid on the depreciation fee plus the lease fee.
Lease Financed Amount: Similar to the loan amount in a traditional loan. This is basically the amount you need to pay back plus interest (lease fee). The net capitalized cost minus the vehicle’s residual value at the end of the lease is the amount the leasing company is ‘loaning’ you.
Total Lease Payments: The total of monthly payments for the entire lease or loan.
Total Depreciation Fee: The total depreciation fee for the entire lease. ‘Total Depreciation Fee’ and ‘Lease Financed Amount’ are the same, with some minor rounding differences that creeps into the depreciation fee.
Total Lease Fee: The total lease fee for the entire lease. This is basically the leasing company’s profit from your lease.
Total Sales Tax: The total sales tax paid on the monthly lease payments.
Annual Cost: The amount of money you will pay each year for this lease.