Lease Payment Calculator
Leasing Runs on a Different Formula Than Buying
A lease payment isn't an amortized loan payment — it's built from two separate charges: a depreciation fee for the value the car is expected to lose over the lease term, and a finance fee based on a "money factor" instead of a stated interest rate. Dealers rarely translate the money factor into an APR unprompted, which makes it easy to underestimate what a lease is actually costing in financing charges.
The Formula
Finance Fee = (Adjusted Cap Cost + Residual Value) × Money Factor
Base Payment = Depreciation Fee + Finance Fee
Total Payment = Base Payment + (Base Payment × Sales Tax Rate)
Adjusted Cap Cost is the negotiated price minus any cap cost reduction (a down payment applied to a lease). The money factor converts to an approximate APR by multiplying by 2,400.
Where This Matters
- Decoding a dealer quote — a money factor like 0.00125 sounds small, but multiplied by 2,400 it's equivalent to a 3% APR, and higher money factors hide worse financing terms behind an unfamiliar unit.
- Cap cost reduction trade-offs — putting money down on a lease lowers the depreciation fee directly, and this calculator shows exactly how much that lowers the monthly payment.
- Comparing lease offers — two leases with the same monthly payment can have different residual values and money factors; running both through the formula shows which terms are actually more favorable.
- Buy vs. lease decisions — computing the lease payment independently gives a real number to weigh against a financed purchase on the same vehicle.
Money Factor to APR Reference
| Money Factor | Approximate APR |
|---|---|
| 0.00083 | 1.99% |
| 0.00125 | 3.00% |
| 0.00150 | 3.60% |
| 0.00208 | 4.99% |
| 0.00250 | 6.00% |
APR ≈ Money Factor × 2,400, the standard conversion used across the leasing industry.
How to Use This Calculator
- Enter the negotiated price (capitalized cost) and any cap cost reduction.
- Enter the residual value, as stated on the lease offer.
- Enter the money factor (e.g., 0.00125) and the lease term in months.
- Enter your local sales tax rate if applicable.
- Select Calculate to see the depreciation fee, finance fee, and total monthly payment.
Related Calculations
Compare the result against financing the same vehicle with the Car Loan Calculator.