Calculate a car lease payment from MSRP, residual and money factor, or work backwards from a dealer quote to the rate you are really being charged.
Enter the deal and get the monthly payment, cash due at signing and total cost.
MSRP sets the residual. The selling price is what you negotiate. They are different numbers and both matter.
A fee rolled into the lease is paid through the monthly payment; a fee due at signing is paid once, in cash.
Most states. Tax is added to every monthly payment, and any cash down is taxed at signing.
Estimates for planning only, not a lease offer or a credit decision. Money factors, residuals and fees are set by the lender and the manufacturer and vary by model, term, mileage allowance and credit tier. Sales tax on a lease is charged differently from state to state — confirm your state's method and rate before relying on these figures.
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A lease quote hides its arithmetic. Four numbers decide your payment — MSRP, the negotiated selling price, the residual and the money factor — and a dealer only has to disclose some of them. This calculator builds the payment line by line from those four, shows how much of every payment is depreciation and how much is finance charge, and works the sum backwards so you can recover the money factor from a quote that never stated one.
A lease payment has exactly two parts. Depreciation covers the value the car loses while you have it: the net capitalized cost minus the residual, divided by the number of months. The rent charge is the lease equivalent of interest: the capitalized cost and the residual added together, multiplied by the money factor. Sales tax then rides on top, in most states on each monthly payment. The residual is the number people most often get wrong, because the percentage is applied to MSRP and not to the price you negotiated.
Lease payment formula
Enter the worksheet numbers and compare the payment the calculator produces with the one you were quoted. A gap means a fee, a rate or a residual you have not been shown.
Work backwards from the quoted payment to the rate. Compare it against the captive lender's advertised buy rate to see whether a markup has been added.
See what cash down does to the monthly figure and what it does to the total. On a lease the cash is at risk if the car is written off, so the trade-off is worth seeing in numbers.
Price 24, 36, 39, 48 and 60 months side by side on the same car to see what each month of extra term actually costs.
A worksheet will show you the price, the term and the residual, and quietly leave out the rate. Enter the quoted payment here and the money factor falls out of the other four numbers — the fastest way to see whether the buy rate has been marked up.
Negotiating $5,000 off a $40,000 car lowers your capitalized cost, not your residual. A calculator with a single price field applies the residual percentage to the discounted figure and understates the residual by thousands, which pushes the payment up by tens of dollars a month.
An acquisition fee rolled into the capitalized cost is paid through the monthly payment. A doc fee due at signing is paid once in cash. Counting a fee in both places inflates the total cost of the lease by its full face value.
Most states tax each monthly payment. Texas taxes the whole selling price at signing and New York taxes the total of payments at signing. The total can be similar while the cash you need on day one differs by thousands.
Stretching from 36 to 48 months lowers the monthly figure and raises what the lease costs in total — and because a longer lease normally carries a lower residual, the real gap is wider than a flat comparison suggests.
Add two pieces. Depreciation is the net capitalized cost minus the residual, divided by the term in months. The rent charge is the net capitalized cost plus the residual, multiplied by the money factor. On a $35,000 car with $995 in capitalized fees and $2,000 down, a $22,000 residual and a 0.00125 money factor over 36 months, depreciation is $333.19 and the rent charge is $69.99, for a base payment of $403.19 before tax.
The money factor is a lease's interest rate written as a small decimal. Multiply it by 2400 to get the equivalent APR, and divide an APR by 2400 to get the money factor. A money factor of 0.00125 is 3% APR; 0.00375 is 9%. The 2400 is a convention, not arithmetic — it folds together 24 and 100.
MSRP. The lender sets the residual as a percentage of the sticker price before any negotiation, which is why it is not negotiable. If you talk a $40,000 car down to $35,000 with a 55% residual, the residual is $22,000 — not $19,250. Applying the percentage to the negotiated price understates the residual by $2,750 and overstates the payment by about $73 a month.
Work backwards from the payment. Subtract the depreciation portion from the base payment to get the monthly rent charge, then divide that by the capitalized cost plus the residual. Switch this calculator to "the money factor" and it does exactly that from the quote you were given. If the result sits well above the captive lender's advertised buy rate, the difference is dealer markup.
Cash down lowers the monthly payment but does not reduce what the lease costs overall — it just pays part of it sooner. If the car is stolen or written off early, insurance settles with the lender and that cash is generally gone. Most guidance is to keep the cap cost reduction small and pay only the fees and first payment at signing.
Higher is better for the lessee, because you only pay for the value the car loses. On a 36-month lease, 55% to 60% of MSRP is strong, 50% to 55% is ordinary, and below about 48% is weak — common on models that depreciate fast, including many EVs. Residuals are set by the lender, not the dealer, so they are not something you can argue down.
It depends on the state. Most tax each monthly payment, so the tax is spread over the term and any cash down is taxed at signing. New York, New Jersey, Ohio and Minnesota among others tax the total of all payments at signing — the same amount of tax, collected years earlier. Texas and Illinois tax the full selling price at signing, as if you had purchased the car. Confirm your state's method before comparing quotes across state lines.
A 48-month lease has the lower monthly payment and the higher total cost, because you pay for four years of depreciation instead of three and carry the rent charge for another twelve months. Two other things usually push the longer lease further ahead on cost: a longer lease normally carries a lower residual, which raises the payment beyond a flat comparison, and it runs past the end of most bumper-to-bumper warranties.