Auto Lease Calculator

What Is an Auto Lease?

An auto lease is a long-term rental agreement where you pay to use a vehicle for a set number of months — typically 24, 36 or 48 — without owning it. Your monthly payment covers vehicle depreciation plus a finance charge (the leasing equivalent of interest), not the full vehicle price.

Key Inputs Explained

• MSRP (Manufacturer's Suggested Retail Price): The sticker price. Used to calculate the residual value as a percentage.
• Cap Cost (Negotiated Price): The price you negotiate with the dealer. Lower cap cost = lower monthly payment.
• Cap Reduction: Any down payment or trade-in value applied upfront.
• Residual Value %: The estimated value of the car at lease end, expressed as a % of MSRP. Set by the manufacturer's finance arm.
• Money Factor: The lease interest rate expressed as a small decimal. Multiply by 2,400 to convert to approximate APR.
• Acquisition Fee: A one-time fee charged by the leasing company (typically $595–$995).

Auto Lease Payment Formula

The standard auto lease payment formula used by all major manufacturers:

• Net Cap Cost = Cap Cost − Cap Reduction + Acquisition Fee
• Residual Value = MSRP × Residual %
• Depreciation Per Month = (Net Cap Cost − Residual) ÷ Term
• Finance Charge Per Month = (Net Cap Cost + Residual) × Money Factor
• Base Payment = Depreciation + Finance Charge
• Total Payment = Base Payment + Sales Tax

Tips to Lower Your Auto Lease Payment

• Negotiate the cap cost (sale price) — this has the biggest impact
• Choose vehicles with high residual values (SUVs, luxury brands often hold value well)
• Verify the money factor against industry benchmarks — dealers sometimes mark it up
• Avoid unnecessary add-ons that inflate the cap cost
• Consider a shorter term for lower total interest cost