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What does a car lease cost in total?

See the monthly payment on a car lease with tax, what you pay at signing, and what the whole lease costs, including a trade-in, rebates, and fees.

Your numbers

Finance charge as
An example rate, not today’s rate.
Trade-in, rebates, fees, and tax
Monthly payment with tax
$487.49

Leasing a car priced at $33,000.00 for 36 months costs $487.49 a month with tax, $2,987.49 at signing, and $20,049.66 in all.

Monthly payment before tax
$455.60
Tax each month
$31.89
Depreciation charge
$324.86
Rent charge
$130.74
Due at signing
$2,987.49
Total cost of the lease
$20,049.66
Total of monthly payments
$17,549.66
Total rent charge
$4,706.55
Net capitalized cost
$31,995.00
Residual value
$20,300.00
Money factor
0.0025
APR equivalent
6%

Monthly payment with tax: $487.49. Leasing a car priced at $33,000.00 for 36 months costs $487.49 a month with tax, $2,987.49 at signing, and $20,049.66 in all.

Monthly payment with tax by lease term (months)

The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use

How to calculate

Computes a car lease payment with sales tax from the price, residual value, and APR or money factor, with a trade-in and its payoff, rebates, and fees, plus the amount due at signing and the total cost of the lease.

Example with the default inputs (MSRP (sticker price) $35,000.00, Negotiated price $33,000.00, Residual value (% of MSRP) 58%, Lease term (months) 36, Finance charge as APR, APR 6%, Cash down $2,000.00, Trade-in value $0.00, Owed on the trade-in $0.00, Rebates and incentives $0.00, Fees added to the lease $995.00, Fees paid at signing $500.00, Sales tax on the payment 7%): Leasing a car priced at $33,000.00 for 36 months costs $487.49 a month with tax, $2,987.49 at signing, and $20,049.66 in all.

Method: payment = ((C − R) ÷ n + (C + R) × MF) × (1 + tax), with C the net capitalized cost, R = MSRP × residual %, n the months, and MF = APR ÷ 2,400.

  • The payment follows the Regulation M progression: the depreciation charge plus the rent charge, spread evenly over the months.
  • The money factor is the APR ÷ 2,400, the usual conversion; a lease contract discloses a rent charge, not an APR.
  • Sales tax is charged on each monthly payment, as in most states; tax on the cash down or on the whole lease is not included.
  • The first monthly payment is due at signing; any trade-in debt is added to the capitalized cost.
  • The defaults are examples, not current offers.

Machine-readable copies: Markdown, JSON.

Worked examples

Each example is checked against the calculator on every build.

  1. MSRP (sticker price) $35,000.00, Negotiated price $33,000.00, Residual value (% of MSRP) 58%, Lease term (months) 36, Finance charge as APR, APR 6%, Cash down $2,000.00, Trade-in value $0.00, Owed on the trade-in $0.00, Rebates and incentives $0.00, Fees added to the lease $995.00, Fees paid at signing $500.00, Sales tax on the payment 7% gives Net capitalized cost $31,995.00, Residual value $20,300.00, Depreciation charge $324.86, Rent charge $130.74, Monthly payment before tax $455.60, Monthly payment with tax $487.49, Due at signing $2,987.49, Total cost of the lease $20,049.66, Money factor 0.0025.
  2. MSRP (sticker price) $19,000.00, Negotiated price $18,800.00, Residual value (% of MSRP) 65%, Lease term (months) 36, Finance charge as Money factor, Money factor 0.00354, Cash down $0.00, Trade-in value $0.00, Owed on the trade-in $0.00, Rebates and incentives $0.00, Fees added to the lease $0.00, Fees paid at signing $0.00, Sales tax on the payment 0% gives Residual value $12,350.00, Rent charge $110.27, Monthly payment before tax $289.44, APR equivalent 8.496%.Source: Federal Reserve Board, Keys to Vehicle Leasing, rent charge example: 0.00354 × (18,800 + 12,350) = $110.27
  3. MSRP (sticker price) $40,000.00, Negotiated price $38,000.00, Residual value (% of MSRP) 55%, Lease term (months) 39, Finance charge as Money factor, Money factor 0.0021, Cash down $0.00, Trade-in value $10,000.00, Owed on the trade-in $12,500.00, Rebates and incentives $1,500.00, Fees added to the lease $895.00, Fees paid at signing $0.00, Sales tax on the payment 6% gives Net capitalized cost $39,895.00, Depreciation charge $458.85, Rent charge $129.98, Monthly payment with tax $624.16, APR equivalent 5.04%.

How it works

Empty optional fields count as 0.

  1. Money factor (MF): with an APR, MF = APR ÷ 2,400; with a money factor, the one entered. The APR equivalent is MF × 2,400.
  2. Trade-in equity: E = trade-in value − owed on the trade-in. When E is negative, the debt −E is added to the cost; when it is positive, it lowers the cost.
  3. Net capitalized cost: C = negotiated price + fees added to the lease + the trade-in debt (if any) − cash down − the trade-in equity (if any) − rebates.
  4. Residual value: R = MSRP × residual percent ÷ 100. C must be more than R; otherwise there is no answer.
  5. Depreciation charge: (C − R) ÷ months. Rent charge: (C + R) × MF.
  6. Monthly payment before tax: depreciation charge + rent charge. Tax each month: that × the tax rate. Monthly payment with tax: the two added.
  7. Due at signing: cash down + fees paid at signing + the first monthly payment with tax.
  8. Totals: total of monthly payments = the payment with tax × months; total cost of the lease = that + cash down + fees paid at signing; total rent charge = the rent charge × months.

Assumptions

  • The payment follows the Regulation M progression: depreciation plus rent charge, spread evenly over the months.
  • The APR-to-money-factor conversion (÷ 2,400) is the usual rule of thumb.
  • Sales tax is charged on each monthly payment only.
  • The first payment is due at signing; the total cost counts it once.
  • Trade-in equity lowers the cost but is not counted as cash in the total cost.
  • The defaults are examples, not current offers.

Worked examples by hand

A $35,000 car at $33,000, 58% residual, 36 months at 6% APR, $2,000 down, $995 of fees in the lease, $500 at signing, 7% tax. MF = 6 ÷ 2,400 = 0.0025. C = 33,000 + 995 − 2,000 = $31,995 and R = 35,000 × 0.58 = $20,300. Depreciation = 11,695 ÷ 36 = $324.86; rent charge = 52,295 × 0.0025 = $130.74; the base payment is $455.60, and with 7% tax $487.49. Due at signing: 2,000 + 500 + 487.49 = $2,987.49. The lease costs 2,500 + 36 × 487.4905 = $20,049.66 in all.

The Federal Reserve’s rent charge example. An adjusted capitalized cost of $18,800, a residual of 65% of $19,000 = $12,350, and a money factor of 0.00354 give a rent charge of 0.00354 × (18,800 + 12,350) = $110.27 a month. Over 36 months the depreciation charge is 6,450 ÷ 36 = $179.17, so the payment before tax is $289.44. The APR equivalent is 0.00354 × 2,400 = 8.50%.

A trade-in with negative equity. A $40,000 car at $38,000 with a 55% residual over 39 months at money factor 0.0021 (5.04%), $895 of fees, $1,500 of rebates, and a trade-in worth $10,000 with $12,500 owed. The $2,500 of trade-in debt is added: C = 38,000 + 895 + 2,500 − 1,500 = $39,895, and R = $22,000. Depreciation = 17,895 ÷ 39 = $458.85; rent charge = 61,895 × 0.0021 = $129.98; with 6% tax the payment is 588.83 × 1.06 = $624.16.

Other questions people ask

How is a car lease payment calculated?

The payment has two parts. The depreciation charge is the net capitalized cost minus the residual value, divided by the months. The rent charge is the money factor × (net capitalized cost + residual value). Add them, then add sales tax. In the example, $324.86 + $130.74 = $455.60, or $487.49 with 7% tax.

How do I turn an APR into a money factor?

Divide the APR by 2,400: 6% is 6 ÷ 2,400 = 0.0025. To go the other way, multiply the money factor by 2,400. Lease contracts disclose a rent charge, not an APR, so ask the dealer for the money factor and check it.

What is the residual value?

The car’s value at the end of the lease that the leasing company sets, as a percent of the MSRP (not the price you negotiate). A higher residual means less depreciation to pay for, so a lower payment.

Should I put money down on a lease?

A cash down payment lowers the monthly payment but not the total cost much, and if the car is stolen or written off early, the down payment is usually lost. Many buyers put little or nothing down and pay the first month and fees at signing.

What happens if I owe more on my trade-in than it is worth?

The difference (negative equity) is added to the capitalized cost, so you pay it off over the lease. The page adds it for you when the amount owed is more than the trade-in value.

Is sales tax charged the same way in every state?

No. Most states tax each monthly payment, which the page does. Some tax the down payment and rebates too, or the whole price up front. Check your state’s rule and add any tax on the down payment to the fees paid at signing.