# What will my car lease payment be?

Computes a vehicle lease payment from the price, residual value, money factor, term, and sales tax, or the money factor inside a quoted payment.

- Page: https://www.acalculator.org/finance/lease-calculator
- JSON spec: https://www.acalculator.org/finance/lease-calculator.json
- Version: 4a9fff7b8b50

## Default answer

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.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| msrp | MSRP (sticker price) | The manufacturer’s suggested retail price, which the residual percentage is taken of. |
| rv | Residual value (% of MSRP) | The value the lessor sets for the end of the lease, as a percent of the MSRP. |
| price | Negotiated price | The gross capitalized cost: the agreed value of the vehicle plus any fees or items paid over the lease. |
| down | Down payment, trade-in and rebates | The capitalized cost reduction: cash down, net trade-in allowance, and rebates. |
| months | Lease term (months) | The number of monthly payments, for example 24, 36, or 48. |
| find | Find | Pick "Payment" to work out the payment from a money factor, or "Money factor" to find it in a quoted payment. |
| mf | Money factor | The number the lessor multiplies the adjusted cap cost plus the residual by to get the monthly rent charge. |
| quoted | Quoted payment before tax | The base monthly payment the dealer quoted, before sales tax. |
| tax | Sales tax on the payment | The sales or use tax rate charged on each monthly payment. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| payment | Monthly payment before tax | The base monthly payment: depreciation plus rent charge. |
| mfOut | Money factor | The money factor: the monthly rent charge divided by the adjusted cap cost plus the residual value. |
| rate | Rate equivalent | The money factor times 2,400: roughly the yearly interest rate the rent charge is like. |
| total | Monthly payment with tax | The base monthly payment plus the sales tax on it. |
| residual | Residual value | The MSRP times the residual percentage. |
| capCost | Adjusted cap cost | The negotiated price minus the down payment, trade-in, and rebates. |
| depreciation | Depreciation per month | The adjusted cap cost minus the residual value, divided by the months. |
| rent | Rent charge per month | The money factor times the adjusted cap cost plus the residual value. |
| totalPaid | Total of monthly payments | The monthly payment with tax times the number of months. |
| totalRent | Total rent charge | The rent charge over the whole lease: what the lease costs beyond depreciation. |

## 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.

## Assumptions

- 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

1. msrp = $40,000.00, rv = 58%, price = $38,000.00, down = $3,000.00, months = 36, find = payment, mf = 0.0025, tax = 7% gives residual = $23,200.00, payment = $473.28, total = $506.41, totalRent = $5,238.00, rate = 6%. Source: hand calculation in content.mdx (Regulation M payment progression, 12 CFR 1013.4(f)).
2. msrp = $19,000.00, rv = 65%, price = $18,800.00, down = $0.00, months = 36, find = payment, mf = 0.00354, tax = 0% gives residual = $12,350.00, rent = $110.27, payment = $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.
3. msrp = $30,000.00, rv = 60%, price = $29,000.00, down = $2,000.00, months = 36, find = mf, quoted = $400.00, tax = 0% gives mfOut = 0.003333, rate = 8%, residual = $18,000.00. Source: hand calculation in content.mdx: (400 − 9,000 ÷ 36) ÷ 45,000.

## FAQ

### 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.

## 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