Lease Calculator
Compute monthly lease payments for equipment or vehicles based on asset value, residual value, money factor, and lease term
Formula
Payment = Depreciation + Finance Charge + Tax
Monthly lease payment combines depreciation (value lost during lease) plus finance charge (interest) plus applicable taxes.
Worked Examples
Example 1: Calculate Lease Payment
Problem:$40,000 car, $22,000 residual, 36 months, 0.00125 money factor.
Solution:Depreciation = ($40,000 - $22,000) / 36 = $500\n\nFinance = ($40,000 + $22,000) × 0.00125 = $77.50\n\nBase payment = $500 + $77.50 = $577.50\nPlus tax (~8%): $623.70/month
Result:$623.70/month
Example 2: Convert Money Factor to APR
Problem:Money factor is 0.00167.
Solution:APR = Money Factor × 2400\nAPR = 0.00167 × 2400\nAPR = 4.01%\n\nThis is the equivalent annual interest rate.
Result:4.01% APR
Example 3: Impact of Residual
Problem:Same car, residual 50% vs 60% on $35,000 car.
Solution:50% residual ($17,500):\nDep = $486/mo\n\n60% residual ($21,000):\nDep = $389/mo\n\nHigher residual saves $97/month or $3,492 over 36 months.
Result:$97/mo savings with higher residual
Frequently Asked Questions
How is a lease payment calculated?
Lease payment = Depreciation + Finance Charge + Tax. Depreciation = (Cap Cost - Residual) / Term. Finance Charge = (Cap Cost + Residual) × Money Factor. Unlike loans, you're paying for the car's depreciation during lease term, not its full value.
Should I put money down on a lease?
Generally no. Down payment reduces monthly payment slightly but you lose that money if the car is totaled. Keep down payment low and invest the difference.
Can I negotiate a lease?
Yes! Negotiate the selling price (cap cost), money factor, and potentially residual. Focus on cap cost first—it affects everything else.
What happens at lease end?
Options: return the car, buy it at residual value, or sometimes extend/trade. Check for excess mileage and wear charges before returning.