Car Lease Calculator: Payment from Money Factor
How is a car lease payment calculated? Enter the lease terms from your quote to see the monthly payment, how it splits into a depreciation fee and a finance fee, and the APR your money factor equals. This page prices the lease on its own. To compare it with buying the same car, use the lease vs buy calculator, and to price a loan instead, use the car payment calculator.
Updated
Report a problem
Formula
- Adjusted cap cost =
capitalised cost - down payment - Residual value =
MSRP x residual% - Depreciation fee =
(adjusted cap cost - residual) / months - Finance fee =
(adjusted cap cost + residual) x money factor - Monthly payment =
depreciation fee + finance fee - Equivalent APR =
money factor x 2400
Taxes, acquisition fees and mileage charges are not included.
Worked example
MSRP 35,000, cap cost 33,000, down payment 2,000, residual 60%, money factor 0.0025, 36 months.
- Adjusted cap cost = 33,000 - 2,000 = 31,000; residual = 0.60 x 35,000 = 21,000
- Depreciation fee = (31,000 - 21,000) / 36 = 277.78
- Finance fee = (31,000 + 21,000) x 0.0025 = 130.00
- Payment = 407.78 a month; APR = 0.0025 x 2400 = 6%
- Total over the lease = 407.78 x 36 + 2,000 = 16,680.08
Use this when
You have a lease quote and want to check the dealer's maths, see how much comes from depreciation versus interest, or test what a bigger down payment or a different term does. Residual values of roughly 50 to 65 percent are typical for a 36-month lease, though the lessor sets them.
How it differs from nearby pages
The lease vs buy calculator compares a lease with a loan over a horizon. The car payment calculator prices the loan side. The car depreciation calculator estimates resale value with yearly rates rather than a residual set in the contract.
Common mistakes
- Negotiating the monthly payment instead of the cap cost, the residual and the money factor.
- Mixing up the money factor with an APR. Multiply it by 2400.
- Forgetting that a down payment on a lease is gone if the car is written off.
- Leaving out tax, fees and mileage charges, which this page does not include.
Frequently asked questions
How is a car lease payment calculated?
Payment = depreciation fee + finance fee. Depreciation fee = (adjusted cap cost - residual) / months, and finance fee = (adjusted cap cost + residual) x money factor. With 31,000, a 21,000 residual, 36 months and 0.0025 that is 277.78 + 130.00 = 407.78.
How do I convert a money factor to APR?
Multiply the money factor by 2400. A money factor of 0.0025 is 0.0025 x 2400 = 6% APR. To go the other way, divide the APR by 2400: 3% APR is 0.00125.
What is the residual value?
It is the lessor's estimate of what the car is worth when the lease ends, usually quoted as a percentage of MSRP. A 60% residual on a 35,000 MSRP is 21,000. A higher residual means you pay for less depreciation, so the payment falls.
What does this calculator leave out?
Sales tax on the payments, acquisition and disposition fees, mileage limits and excess wear charges vary by lessor and place, so they are not included. Add them from your quote to get the true monthly cost.
What is the lease payment on a 40,000 car with a 0.002 money factor?
With a 38,000 cap cost, no down payment, a 58 percent residual (23,200) and 36 months, the depreciation fee is 411.11 and the finance fee is 122.40. The payment is 533.51 a month, and 0.002 equals a 4.8 percent APR.
How does a shorter lease term change the payment?
The same car over 24 months has a 616.67 depreciation fee instead of 411.11, because the same loss in value is spread over fewer months. The payment rises to 739.07, though the total over the lease falls to 17,737.68.
How much does a higher residual value lower the payment?
On the default 35,000 lease, raising the residual from 60 to 65 percent lifts it from 21,000 to 22,750. The depreciation fee drops from 277.78 to 229.17 and the payment from 407.78 to 363.54.