How to Figure Your Monthly Auto Lease Payments

Car Lease Payment Calculator and Equation

Unlike auto loans, the formula for lease payments does not use any complicated math the amortize the interest you pay for renting a car. You can calculate your monthly car lease payments with a simple hand calculator so long as you know the formula.

Knowing the lease payment equation will prepare you when you shop around for the best lease deals, and help you catch mistakes your dealer's math--which happens more often than you might expect!

The equation is explained below our easy-to-use online calculator.

Online Lease Calculator

Purchase Price (Capitalized Cost) $
Down Payment $
Value of Any Trade-In $
Net Capitalized Cost $ (auto-filled for you)
Residual Value $
Lease Term in Months   
Select One: APR = %
Money Factor =
Sales Tax %

You pay $ per month.

Lease Payment Formula

There are three components to the monthly lease payment formula: depreciation cost, finance charge, and sales tax. The monthly depreciation fee is the difference between the net price of the car (similar the the "amount borrowed" or "principal" when you take out an auto loan) and the residual value (the value of car at the end of the leasing period), divided by the number of months:

Depreciation Fee =
(Net Cap. Cost - Residual Value)/Months

The finance charge is essentially the interest applied to the depreciation fee. The formula for the monthly finance charge is

Finance Fee =
(Net Cap. Cost + Residual Value)*(Money Factor)

or equivalently

Finance Fee =
(Net Cap. Cost + Residual Value)*(APR/2400)

The "money factor" in a lease is simply the annual interest rate divided by 2400. For example, if you are quoted an interest rate of 6.24%, the money factor is 6.24/2400 = 0.0026. Also note that in the monthly finance charge, the net cost and residual value are added, not subtracted as in the depreciation fee.

Before tax, your monthly lease payments are given by the formula

Monthly Payment = Depreciation Fee + Finance Fee

If your state or city charges sales tax (most do), you simply multiply your before-tax monthly payment by the quantity (1 + rate/100). For example, if the sales tax rate is 5.5%, you would multiply the payment by 1.055 to obtain the final answer.

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