# What does a car lease cost in total?

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.

- Page: https://www.acalculator.org/finance/auto-lease-calculator
- JSON spec: https://www.acalculator.org/finance/auto-lease-calculator.json
- Version: aeb66aca1626

## Default answer

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.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| msrp | MSRP (sticker price) | The manufacturer’s suggested retail price, which the residual percentage is taken of. |
| price | Negotiated price | The price agreed for the car, before fees, trade-in, and rebates. |
| residual | Residual value (% of MSRP) | The value the leasing company sets for the end of the lease, as a percent of the MSRP. |
| months | Lease term (months) | The number of monthly payments, for example 24, 36, or 48. |
| mode | Finance charge as | Enter the lease rate as an APR or as the money factor the leasing company quotes. |
| apr | APR | The lease rate as a yearly percent; the money factor is this ÷ 2,400. |
| mf | Money factor | The number the leasing company multiplies the net cap cost plus the residual by for the monthly rent charge. |
| down | Cash down | Cash you pay at signing to lower the capitalized cost. |
| trade | Trade-in value | What the dealer gives you for your current car. |
| owed | Owed on the trade-in | The loan payoff still due on the car you trade in; any amount over its value is added to the lease. |
| rebates | Rebates and incentives | Manufacturer or dealer rebates applied to lower the capitalized cost. |
| fees | Fees added to the lease | The acquisition fee and other fees rolled into the capitalized cost. |
| upfront | Fees paid at signing | Title, registration, and other fees you pay in cash when you sign. |
| tax | Sales tax on the payment | The sales or use tax rate charged on each monthly payment. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| payment | Monthly payment with tax | The base monthly payment plus the sales tax on it. |
| base | Monthly payment before tax | The depreciation charge plus the rent charge, each month. |
| monthlyTax | Tax each month | The sales tax on the base monthly payment. |
| depreciation | Depreciation charge | The net capitalized cost minus the residual value, spread over the months. |
| rent | Rent charge | The monthly finance charge: the money factor × (net capitalized cost + residual value). |
| atSigning | Due at signing | The cash down, the fees paid at signing, and the first monthly payment. |
| totalCost | Total cost of the lease | All the monthly payments, the cash down, and the fees paid at signing. |
| totalPayments | Total of monthly payments | The monthly payment with tax × the number of months. |
| totalRent | Total rent charge | The rent charge over the whole lease. |
| netCap | Net capitalized cost | The price plus fees and any trade-in debt, minus the cash down, trade-in equity, and rebates. |
| residualValue | Residual value | The MSRP × the residual percent. |
| mfOut | Money factor | The money factor used: the APR ÷ 2,400, or as entered. |
| aprOut | APR equivalent | The money factor × 2,400, the yearly rate it is usually compared with. |

## 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.

## Assumptions

- 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.

## Worked examples

1. msrp = $35,000.00, price = $33,000.00, residual = 58%, months = 36, mode = apr, apr = 6%, down = $2,000.00, trade = $0.00, owed = $0.00, rebates = $0.00, fees = $995.00, upfront = $500.00, tax = 7% gives netCap = $31,995.00, residualValue = $20,300.00, depreciation = $324.86, rent = $130.74, base = $455.60, payment = $487.49, atSigning = $2,987.49, totalCost = $20,049.66, mfOut = 0.0025.
2. msrp = $19,000.00, price = $18,800.00, residual = 65%, months = 36, mode = mf, mf = 0.00354, down = $0.00, trade = $0.00, owed = $0.00, rebates = $0.00, fees = $0.00, upfront = $0.00, tax = 0% gives residualValue = $12,350.00, rent = $110.27, base = $289.44, aprOut = 8.496%. Source: Federal Reserve Board, Keys to Vehicle Leasing, rent charge example: 0.00354 × (18,800 + 12,350) = $110.27.
3. msrp = $40,000.00, price = $38,000.00, residual = 55%, months = 39, mode = mf, mf = 0.0021, down = $0.00, trade = $10,000.00, owed = $12,500.00, rebates = $1,500.00, fees = $895.00, upfront = $0.00, tax = 6% gives netCap = $39,895.00, depreciation = $458.85, rent = $129.98, payment = $624.16, aprOut = 5.04%.

## FAQ

### 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.

## Sources

- Regulation M (Consumer Leasing), 12 CFR 1013.4(f), Payment calculation for motor vehicle leases. https://www.consumerfinance.gov/rules-policy/regulations/1013/4/
- Federal Reserve Board, Keys to Vehicle Leasing: More information about the rent charge. https://www.federalreserve.gov/pubs/leasing/resource/consider/ongoing_info6.htm
- Federal Reserve Board, Keys to Vehicle Leasing: frequently asked questions. https://www.federalreserve.gov/Pubs/leasing/resource/faq.htm