Determine your estimated monthly car lease payment, including taxes, depreciation, and finance fees.

How It Works

Leasing a car is different from buying one. Instead of paying for the entire vehicle, you only pay for the depreciation (the value the car loses) during the time you drive it, plus a finance charge (interest) and taxes.

Car Price: Enter the negotiated price of the vehicle (often called the Capitalized Cost).
Down Payment & Trade-In: Any money you put down upfront reduces the amount you are financing.
Lease Term: Typically 24, 36, or 48 months.
Interest Rate (APR): Dealerships usually quote a "Money Factor", but for ease of use, you can enter the equivalent APR percentage here. (Money Factor × 2400 = APR).
Residual Value: The estimated value of the car at the end of the lease, expressed as a percentage of the MSRP.
Sales Tax Rate: Your local tax rate, applied to your monthly payment.

Formula and Assumptions

A lease payment has three main components:

1. Depreciation Fee

The portion of the car's value you are "using up."

Net Cap Cost = Car Price - (Down Payment + Trade-In)
Residual Amount = Car Price × (Residual % / 100)
Depreciation Fee = (Net Cap Cost - Residual Amount) / Lease Term

2. Finance Fee

The interest charged by the leasing company.

Money Factor = APR / 2400
Finance Fee = (Net Cap Cost + Residual Amount) × Money Factor

3. Taxes

Unlike buying, where you usually pay tax on the entire car upfront, most states charge sales tax on the monthly lease payment (Depreciation + Finance Fee).

Monthly Tax = (Depreciation Fee + Finance Fee) × (Tax Rate / 100)

Worked Example

Suppose you want to lease a $30,000** car for **36 months** with a **$ 3,000 down payment. The residual is 50%, the APR is 6%, and your tax rate is 8%.

Net Cap Cost: $30,000 -$ 3,000 = $27,000
Residual Amount: $30,000 × 50% =$ 15,000
Depreciation: ( $27,000 -$ 15,000) / 36 = $333.33/mo
Money Factor: 6 / 2400 = 0.0025
Finance Fee: ( $27,000 +$ 15,000) × 0.0025 = $105.00/mo
Pre-Tax Payment: $333.33 +$ 105.00 = $438.33/mo
Tax: $438.33 × 8% = **$ 35.07/mo**
Total Monthly Payment: $473.40

Result Interpretation

Monthly Payment (Total): The actual amount you will write a check for every month.
Total Lease Cost: The sum of all your monthly payments over the lease term.
Total Out of Pocket: Your total lease cost plus any upfront down payments or trade-ins.

FAQs

What is a Money Factor?

A Money Factor (or lease factor) is how leasing companies express interest rates. It looks like a very small decimal (e.g., 0.0025). To convert it to an APR (Annual Percentage Rate) that you are familiar with, multiply it by 2400.

Can I negotiate a lease?

Yes! You can negotiate the initial Car Price (Capitalized Cost) just like you would if you were buying the car. However, the Residual Value is strictly set by the bank and cannot be negotiated.

Sources & Review

Based on standard US automotive leasing calculation standards.
Last Reviewed: September 2026

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