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Lease vs Buy Car

Lease Payment Calculator

A US closed-end lease payment is two pieces — a depreciation fee plus a rent charge — with sales tax on top. Enter the MSRP, negotiated price, residual value, money factor and fees from your quote, and this calculator rebuilds the payment line by line, including due at signing. On its documented default assumptions it reproduces the fully worked example from our methodology page: $640.84 per month, with $2,640.84 due at signing.

Vehicle & price
$

Residual value is calculated off MSRP, not the negotiated price.

$

The price you actually agreed on — the starting capitalized cost.

$

Cash, trade-in and rebates applied to lower the amount you lease.

Lease terms
mo
%

= $25,650 on this MSRP

APR % = money factor × 2400 (0.00250 ≈ 6% APR). This one ≈ 6% APR.

Fees & tax
$

Off = pay it in cash at signing instead.

%

Most US states tax each monthly lease payment; a few tax the full price upfront. Set the basis to match your state.

Estimated monthly payment

$640.84/mo

for 3 years, with $2,640.84 due at signing. The money factor of 0.0025 works out to ≈ 6% APR.

Full payment breakdown

Adjusted capitalized cost
$41,195
Residual value (57% of MSRP)
$25,650
Depreciation fee / mo
$431.81
Rent charge (finance fee) / mo
$167.11
Pre-tax monthly payment
$598.92
Sales tax (7% on each payment)
$41.92
Monthly payment
$640.84

Due at signing

First month's payment
$640.84
Cap cost reduction
$2,000
Total due at signing
$2,640.84

A disposition fee and any excess mileage charges are billed at lease end, not at signing — they are not part of this payment quote.

All defaults are editable estimates, not live market rates — confirm your money factor, residual value and fees with the dealer before signing. Every formula is documented on the methodology page.
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How this calculator works

Every US closed-end lease uses the same four formulas. The adjusted capitalized cost is the negotiated price, plus any capitalized fees (the acquisition fee, when you roll it in), minus your cap cost reduction. The residual value is a percentage of MSRP — the leasing company's projection of the car's worth at lease end, set before you negotiate anything. The depreciation fee spreads the gap between those two numbers over the term: (adjusted cap cost − residual) ÷ months. The rent charge is the financing cost: (adjusted cap cost + residual) × money factor, where money factor × 2,400 gives the equivalent APR. Add the two fees, then apply sales tax — most states tax each monthly payment, a few tax the full price upfront.

The step-by-step derivation, with the same worked example you can check by hand, is in how car lease math works; every default assumption and simplification is documented on the methodology page.

Frequently asked questions

What is a money factor and how do I convert it to an APR?
The money factor is the lease's financing rate in disguise: multiply it by 2,400 to get the equivalent APR, so a money factor of 0.00250 is about a 6% APR. This calculator shows the conversion live under the money factor input. Dealers rarely volunteer the number — ask for it directly and compare it against current loan rates. The full derivation is in how car lease math works.
Why is the residual value based on MSRP, not the negotiated price?
The leasing company projects the car's end-of-lease value as a percentage of the full sticker price (MSRP), and that projection is fixed before you negotiate anything. Your negotiation lowers the capitalized cost instead — and since the depreciation fee is the gap between cap cost and residual spread over the term, every dollar you negotiate off the price comes straight out of your payments. See the lease math guide for a worked example.
Is $0 down ("sign and drive") smarter on a lease?
Often, yes. A large cap cost reduction lowers the monthly payment, but if the car is totaled or stolen early in the lease, that money is generally gone — the insurance payout goes to the leasing company, not back to you. Many lessees prefer a somewhat higher payment over putting thousands at risk; try it in the calculator by setting the cap cost reduction to $0. The FTC's guide to financing or leasing a car covers the trade-off.
What fees should I expect at signing?
Typically the first month's payment, any cap cost reduction, and an acquisition fee — which you can pay upfront or roll into the lease (capitalize) — plus registration and doc fees, and in a few states, sales tax on the full price upfront. Budget separately for end-of-lease charges: a disposition fee and any excess-mileage charges. The defaults here are typical estimates documented on the methodology page, and the mileage and fees guide walks through every fee.

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