What will my car lease payment be?
Work out a car lease payment the way the lease contract does, or find the money factor hidden in a dealer's quote.
- Monthly payment before tax
- $473.28
A lease of $38,000.00 with $3,000.00 down and a $23,200.00 residual over 36 months costs $506.41 a month with tax, at money factor 0.0025.
- Money factor
- 0.0025
- Rate equivalent
- 6%
- Monthly payment with tax
- $506.41
- Residual value
- $23,200.00
- Adjusted cap cost
- $35,000.00
- Depreciation per month
- $327.78
- Rent charge per month
- $145.50
- Total of monthly payments
- $18,230.66
- Total rent charge
- $5,238.00
Monthly payment before tax: $473.28. A lease of $38,000.00 with $3,000.00 down and a $23,200.00 residual over 36 months costs $506.41 a month with tax, at money factor 0.0025.
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 vehicle lease payment from the price, residual value, money factor, term, and sales tax, or the money factor inside a quoted payment.
Example with the default inputs (MSRP (sticker price) $40,000.00, Residual value (% of MSRP) 58%, Negotiated price $38,000.00, Down payment, trade-in and rebates $3,000.00, Lease term (months) 36, Find Payment, Money factor 0.0025, Sales tax on the payment 7%): A lease of $38,000.00 with $3,000.00 down and a $23,200.00 residual over 36 months costs $506.41 a month with tax, at money factor 0.0025.
Method: payment = (price − down − residual) ÷ months + (price − down + residual) × money factor, with residual = MSRP × residual %; with tax = payment × (1 + tax rate); rate equivalent = money factor × 2,400.
- The payment follows the Regulation M progression: depreciation and amortized amounts plus the rent charge, spread over the months.
- The monthly rent charge is the money factor times the adjusted cap cost plus the residual value.
- Sales tax is charged on each monthly payment, as in most states; amounts due at signing are not included.
- The rate equivalent (money factor × 2,400) is a rule of thumb, not a disclosed lease rate.
Worked examples
Each example is checked against the calculator on every build.
- MSRP (sticker price) $40,000.00, Residual value (% of MSRP) 58%, Negotiated price $38,000.00, Down payment, trade-in and rebates $3,000.00, Lease term (months) 36, Find Payment, Money factor 0.0025, Sales tax on the payment 7% gives Residual value $23,200.00, Monthly payment before tax $473.28, Monthly payment with tax $506.41, Total rent charge $5,238.00, Rate equivalent 6%.Source: hand calculation in content.mdx (Regulation M payment progression, 12 CFR 1013.4(f))
- MSRP (sticker price) $19,000.00, Residual value (% of MSRP) 65%, Negotiated price $18,800.00, Down payment, trade-in and rebates $0.00, Lease term (months) 36, Find Payment, Money factor 0.00354, Sales tax on the payment 0% gives Residual value $12,350.00, Rent charge per month $110.27, Monthly payment before tax $289.44.Source: Federal Reserve Board, Keys to Vehicle Leasing, rent charge example: 0.00354 × (18,800 + 12,350) = $110.27; the rest by hand in content.mdx
- MSRP (sticker price) $30,000.00, Residual value (% of MSRP) 60%, Negotiated price $29,000.00, Down payment, trade-in and rebates $2,000.00, Lease term (months) 36, Find Money factor, Quoted payment before tax $400.00, Sales tax on the payment 0% gives Money factor 0.003333, Rate equivalent 8%, Residual value $18,000.00.Source: hand calculation in content.mdx: (400 − 9,000 ÷ 36) ÷ 45,000
How it works
Regulation M (12 CFR 1013.4(f)) sets the order of the payment calculation on a vehicle lease. Write M for the MSRP, v for the residual percentage as a decimal, G for the negotiated price (gross capitalized cost), D for the down payment, trade-in, and rebates (capitalized cost reduction), n for the months, f for the money factor, and t for the sales tax rate as a decimal.
- Residual value: R = M × v.
- Adjusted cap cost: C = G − D. It must be more than 0.
- Depreciation per month: (C − R) ÷ n.
- Rent charge per month: (C + R) × f.
- Base monthly payment: depreciation plus rent charge: P = (C − R) ÷ n + (C + R) × f. It must not be negative.
- With tax: P × (1 + t). The total of payments is that times n, and the total rent charge is the rent charge times n.
- Rate equivalent: f × 2,400 (a rule of thumb for comparing with a loan rate, not a disclosed rate).
Finding the money factor in a quoted payment Q (before tax): f = (Q − (C − R) ÷ n) ÷ (C + R). If Q is less than the depreciation, no money factor fits.
Assumptions
- Fees you capitalize (for example an acquisition fee) are part of the negotiated price; amounts paid at signing are not included.
- Sales tax is charged on each monthly payment, as in most states. Some states tax the whole price up front.
- There are no excess-mileage, wear, or disposition charges at the end of the lease.
- Values are not rounded between steps; only the display is rounded.
Worked examples by hand
A $40,000 MSRP, 58% residual, $38,000 price, $3,000 down, 36 months, money factor 0.0025, 7% tax. R = 40,000 × 0.58 = $23,200; C = 38,000 − 3,000 = $35,000. Depreciation is (35,000 − 23,200) ÷ 36 = $327.78 and the rent charge is (35,000 + 23,200) × 0.0025 = $145.50, so the payment is $473.28 before tax and 473.278 × 1.07 = $506.41 with tax. The total rent charge is 145.50 × 36 = $5,238, and the rate equivalent is 0.0025 × 2,400 = 6%.
The Federal Reserve's rent charge example. Adjusted cap cost $18,800 (price $18,800, nothing down) and residual $12,350 (65% of a $19,000 MSRP), money factor 0.00354: the rent charge is 0.00354 × (18,800 + 12,350) = $110.27, as in the guide. Over 36 months the depreciation is (18,800 − 12,350) ÷ 36 = $179.17, so the payment is $289.44.
Finding the money factor. MSRP $30,000 with a 60% residual gives R = $18,000; price $29,000 with $2,000 down gives C = $27,000. For a quoted $400 a month over 36 months, depreciation is (27,000 − 18,000) ÷ 36 = $250, so f = (400 − 250) ÷ (27,000 + 18,000) = 0.0033333, a rate equivalent of 8%.
Other questions people ask
How is a car lease payment calculated?
A lease payment has two parts. Depreciation is the adjusted cap cost (the price minus your down payment, trade-in, and rebates) minus the residual value, spread over the months. The rent charge is the money factor times the adjusted cap cost plus the residual. Sales tax is then added in most states. For a $35,000 adjusted cap cost, a $23,200 residual, 36 months, and a money factor of 0.0025: 327.78 + 145.50 = $473.28 before tax.
What is a money factor?
It is the number some lessors use to work out the rent charge, the lease's version of interest. The Federal Reserve's leasing guide notes that it is not a lease rate. A common rule of thumb multiplies it by 2,400 to compare it with a loan rate: 0.0025 × 2,400 = 6%.
Why multiply the money factor by 2,400?
The rent charge is money factor × (cap cost + residual), and (cap cost + residual) ÷ 2 is roughly the average amount owed over the lease. A loan at a yearly rate r on that average charges r ÷ 12 × (cap cost + residual) ÷ 2 a month, which is (cap cost + residual) × r ÷ 24. So a money factor of r ÷ 24, or rate in percent ÷ 2,400, charges about the same.
What is the residual value?
It is what the lessor says the car will be worth at the end of the lease, usually a percentage of the MSRP. A higher residual means less depreciation to pay, so a lower payment.
Does a bigger down payment save money on a lease?
It lowers the monthly payment, because it lowers the adjusted cap cost and the rent charge on it. But if the car is stolen or totaled early in the lease, the insurance payout may not give that money back to you.
How can I check a dealer's quote?
Choose "Money factor", enter the price, residual, term, and the quoted payment before tax. If the money factor it shows is higher than the lessor's base rate, the quote includes a markup or items you did not ask for.