How this calculator works
Unlike a car loan, a lease payment is not amortized interest on the full vehicle price — it is made of two separate pieces. The depreciation fee covers the portion of the car's value you use up over the lease, from the negotiated price down to its residual value at the end of the term. The finance fee, based on the money factor, is the leasing equivalent of interest, charged on the average of what you owe and what the car will be worth at turn-in.
Dealers often quote the finance charge as a money factor, a small decimal like 0.00125, rather than as a percentage rate. This calculator lets you enter either the money factor directly from a lease offer, or an equivalent APR, which it converts using the standard leasing-industry formula MF = APR ÷ 2400.
The formulas
Money factor from APR: MF = APR ÷ 2400Adjusted cap cost = negotiated price − down payment (cap cost reduction)Residual value = negotiated price × residual %Monthly depreciation fee = (adjusted cap cost − residual value) ÷ term (months)Monthly finance fee = (adjusted cap cost + residual value) × money factorMonthly lease payment = depreciation fee + finance feeResidual value here is applied to the negotiated price you enter; if your lease quote states the residual as a dollar amount based on MSRP instead, divide it by your negotiated price to get the equivalent percentage for this calculator. Figures shown are before any state or local lease tax, which varies by jurisdiction and is not included.
Worked example: $35,000 price, $2,000 down, 55% residual, 36 months, 3% APR
- Money factor = 3 ÷ 2400 = 0.00125.
- Adjusted cap cost = 35,000 − 2,000 = $33,000; residual value = 35,000 × 0.55 = $19,250.
- Depreciation fee = (33,000 − 19,250) ÷ 36 = $381.94 a month.
- Finance fee = (33,000 + 19,250) × 0.00125 = $65.31 a month; total monthly payment = 381.94 + 65.31 = $447.26.
Frequently asked questions
What exactly is a money factor?
It is the way auto leases express the finance charge, as a small decimal instead of a percentage rate. Multiplying it by 2400 converts it to the equivalent APR, and dividing an APR by 2400 gives the equivalent money factor — the same conversion this calculator uses.
Why is the finance fee based on the sum of cap cost and residual value, not just the balance owed?
Because a lease payment does not pay down to zero the way a loan does — at the end of the term you still owe the residual value if you keep the car. Averaging the starting adjusted cap cost and the ending residual value approximates the finance charge over a balance that only partially declines.
Does a bigger down payment always lower the monthly payment?
Yes, a larger down payment (cap cost reduction) lowers the adjusted cap cost, which reduces both the depreciation fee and the finance fee. Keep in mind that money put down on a lease is typically not recoverable if the car is stolen or totaled early, unlike equity in a purchase.
Why does a higher residual percentage lower my payment?
A higher residual value means the car is expected to hold more of its value, so there is less depreciation to pay for over the lease. Vehicles with strong resale value typically have higher residuals and therefore lower lease payments for the same price.
Does this include tax, acquisition fees or a security deposit?
No — it calculates only the depreciation and finance components of the monthly payment. Sales or lease tax (which varies by state or region), acquisition fees, and any security deposit are separate costs to add from your specific lease offer.