Car Lease Calculator

A lease payment has two parts: the depreciation fee and the finance fee. The depreciation fee is (Net Cap Cost - Residual Value) / Lease Term. The finance fee is (Net Cap Cost + Residual Value) x Money Factor. Your monthly lease payment is the sum of these two. The net capitalized cost is the negotiated price plus fees minus your down payment and trade-in.

A money factor is the lease equivalent of an interest rate, expressed as a small decimal like 0.00125. To convert money factor to APR, multiply by 2400 (e.g., 0.00125 x 2400 = 3.0% APR). A lower money factor means lower finance charges. Good money factors are typically below 0.002 (4.8% APR).

Residual value is the predicted worth of the car at the end of the lease, set by the leasing company as a percentage of MSRP. A higher residual value means lower depreciation and a lower monthly payment. Typical residuals are 50-65% for a 36-month lease. Vehicles that hold their value well (like Toyota, Honda, Lexus) tend to have higher residuals and cheaper lease payments.

Leasing typically has lower monthly payments than buying because you only pay for the car's depreciation during the lease term, not the full price. However, buying is usually cheaper long-term since you build equity and own the car outright after the loan is paid off. Leasing makes sense if you want a new car every 2-3 years, drive under 12,000 miles per year, and prefer lower payments. Buying is better if you keep cars for 5+ years.

Common lease fees include the acquisition fee (charged at lease signing, typically $595-$1,095), disposition fee (charged at lease end if you don't buy or lease another vehicle, typically $300-$500), excess mileage charges (usually $0.15-$0.30/mile over the limit), and excess wear-and-tear charges. The acquisition fee is rolled into the capitalized cost, while the disposition fee is due at lease turn-in.

Yes, you can negotiate the capitalized cost (selling price), money factor, and sometimes the acquisition fee. The residual value is set by the leasing company and is generally non-negotiable. Focus on negotiating the cap cost down from MSRP just like you would when buying. Also check manufacturer lease specials, which may offer subvented (subsidized) money factors significantly below market rates.