Lease Calculator
Calculate your monthly car lease payment using the money factor method — with total lease cost, APR equivalent, and lease vs buy comparison.
Example Calculation
MSRP $35,000 | Cap Cost $33,000 | Residual 55% | MF 0.00125 | 36mo | Down $2,000 | Fee $895
- Residual Value: $19,250.00
- Net Cap Cost: $31,895.00
- Depreciation: $351.25/mo
- Finance Charge: $63.93/mo
- Monthly: $415.18
- Total Lease Cost: $17,841.48
- APR: 3.00%
Frequently Asked Questions
What is a money factor in a car lease?
The money factor is the lease equivalent of an interest rate expressed as a small decimal like 0.00125. To convert to approximate APR multiply by 2400. A money factor of 0.00125 equals about 3% APR. Dealers sometimes present money factors to obscure the true cost of financing. Always convert to APR to compare leasing costs against loan rates. A money factor above 0.0025 (6% APR) is generally considered high.
What is residual value and why does it matter?
Residual value is the estimated worth of the vehicle at the end of the lease term expressed as a percentage of MSRP. A higher residual value means lower depreciation which directly reduces your monthly payment. The leasing company sets the residual value — you cannot negotiate it. Vehicles with high resale values like popular SUVs and trucks typically have better residuals making them less expensive to lease.
Should I negotiate the cap cost on a lease?
Yes — absolutely. The capitalized cost (cap cost) is the agreed-upon price of the vehicle and is fully negotiable just like a purchase price. Never pay MSRP on a lease. Negotiate the cap cost down first then discuss lease terms. Every $1,000 reduction in cap cost saves you about $27 per month on a 36-month lease. Many people make the mistake of focusing on the monthly payment without negotiating the vehicle price.
Is leasing or buying a car better?
Leasing makes sense if you want lower monthly payments always want a new car under warranty and drive fewer than 12,000 to 15,000 miles per year. Buying is better if you want to own the vehicle build equity drive more miles or customize the car. Financially buying usually costs less over the long run since you eventually own an asset. Leasing is essentially paying for depreciation plus financing costs with nothing to show at the end.
What happens at the end of a car lease?
At lease end you can return the vehicle and walk away, purchase the vehicle at the pre-agreed residual price, or lease a new vehicle. If you exceeded the mileage allowance you pay a per-mile penalty typically $0.15 to $0.25 per mile. Excessive wear and tear charges may also apply. If the vehicle is worth more than the residual value at lease end you may be able to sell it yourself or use the equity toward a new vehicle.