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Auto Lease Calculator

Work out a car lease payment from the capitalized cost, residual value and money factor, as the Federal Reserve’s leasing guide sets it out.

By Nitin Raturi · Last reviewed

Your worksheet

How to use the Auto Lease Calculator

Work out a monthly lease payment from the figures in a lease offer.

  1. Enter the capitalized cost and any cap cost reduction.
  2. Enter the residual value and the lease term.
  3. Enter the money factor and the sales tax rate.
  4. Read the payment, then the depreciation and rent charge behind it.

Good to know

  • Ask the dealer for the money factor and residual in writing.
  • The address stores your figures for sharing; anyone with the link can read them.

Monthly lease payment as the Federal Reserve’s leasing guide sets it out: depreciation plus a rent charge from the money factor, plus tax.

Capitalized cost

The agreed value of the vehicle plus anything else rolled into the lease, such as a service contract.

How to fill it in

  • Enter US dollars. Negotiate this like a purchase price.

Example

$21,500 with a $12,350 residual over 48 months at 0.00354 costs $310.45 a month.

Cap cost reduction

Money that lowers the capitalized cost: a down payment, trade-in credit or rebate.

How to fill it in

  • Enter 0 if none.

Example

Putting $2,700 down lowers the payment to $244.65.

Keep in mind: Money paid up front can be lost if the vehicle is stolen or written off early.

Residual value

What the lessor expects the vehicle to be worth at the end of the lease.

How to fill it in

  • It is set by the lessor and shown in the lease contract.

Lease term

How many monthly payments.

How to fill it in

  • Enter 6 to 84 months. The residual usually changes with the term.

Example

Over 36 months with the same residual, the payment is $374.00.

Money factor

The decimal lessors use to set the rent charge.

How to fill it in

  • Ask the dealer for it; enter it as a decimal, such as 0.00354.

Example

At 0.00354 the default lease has a rent charge of $119.83 a month.

Keep in mind: A money factor is not a lease rate.

Sales or use tax

The tax your state or county adds to each payment.

How to fill it in

  • Enter 0% to 20%.

Example

A $35,000 lease with $3,000 down, $19,000 residual, 36 months, 0.0025 and 8.25% tax costs $528.92.

Monthly lease payment

$310.45

$190.63 of depreciation plus a $119.83 rent charge gives a base payment of $310.45. Over 48 months the base payments total $14,901.79.

Adjusted capitalized cost
$21,500.00
Depreciation over the lease
$9,150.00
Monthly depreciation
$190.63
Monthly rent charge
$119.83
Total rent charge
$5,751.79
Rough rate equivalent
about 8.5%

A money factor is not a lease rate. The rough rate equivalent (money factor × 2,400) assumes interest on the average of the starting and ending value; treat it as a guide only.

Federal Reserve money-factor method: rent charge = money factor × (adjusted capitalized cost + residual value). Fees due at signing, mileage and wear charges, and the disposition fee are not included.

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How this calculator works

  1. Step 1Depreciation$190.63Adjusted cost minus residual, spread over the term.
  2. Step 2Rent charge$119.83Money factor × (adjusted cost + residual).
  3. Step 3Base payment$310.45Depreciation plus rent charge.

When you lease, you pay for the part of the vehicle’s value you use up, plus a rent charge, which works like interest. The Federal Reserve’s consumer guide to leasing sets out the method used here.

The rent charge comes from the money factor, a small decimal. It is multiplied by the sum of the adjusted capitalized cost and the residual value.

Worked example: the Federal Reserve’s $21,500 vehicle

Base monthly payment
Depreciation per month
(adjusted cap cost − residual) ÷ months
Rent charge
money factor × (adjusted cap cost + residual)
  1. Adjusted capitalized cost$21,500.00
  2. Residual value$12,350.00
  3. Depreciation ÷ 48$190.63
  4. 0.00354 × $33,850$119.83
  5. Base monthly payment$310.45

The guide’s own rent-charge example uses $18,800 and $12,350: 0.00354 × $31,150 = $110.27. That is this vehicle with $2,700 down.

What changes the payment

  • 48 months, no money down$310.45
  • $2,700 down$244.65
  • 36 months, same residual$374.00
  • Money factor 0$190.63
Monthly payment for the worked vehicle

Tax on each payment

  • Base payment$488.61$3,000 down, $19,000 residual, 0.0025.
  • With 8.25% tax$528.92Tax adds $40.31 a month.

A money factor is not a lease rate: the Federal Reserve warns it cannot be turned into one by moving the decimal point.

Lease or buy?

A lease pays for the car's use; a loan pays for the car. Compare both on the same total cost.

To price buying instead, use the car loan calculator. If the dealer offers cash back or a low rate, the cash back or low interest calculator finds the break-even.

For the car’s fall in value over time, the depreciation calculator shows several methods.

Common mistakes

  • Mistake: Comparing leases by monthly payment alone.

    Instead: Compare the capitalized cost, residual, money factor and fees.

  • Mistake: Treating the money factor as a percentage.

    Instead: Enter it as a decimal, such as 0.00354.

  • Mistake: Forgetting end-of-lease costs.

    Instead: Ask about excess mileage, wear and the disposition fee.

Methodology and sources

A separate script builds each lease month by month in exact fractions and reproduces the Fed’s rent-charge example.

The method and example come from the Federal Reserve Board’s Keys to Vehicle Leasing. Sources, the review date and the financial disclaimer follow.

Read how we test our calculators, or browse more money calculators.

Frequently asked questions

How is a lease payment calculated?

Depreciation (adjusted cap cost minus residual, ÷ months) plus a rent charge (money factor × (adjusted cap cost + residual)), plus tax. The Fed’s $21,500 example comes to $310.45.

What is a money factor?

A decimal lessors use to set the rent charge. The Federal Reserve notes it is not a lease rate and cannot be turned into one by moving the decimal point.

How is the rent charge worked out?

Money factor × (adjusted capitalized cost + residual value). The Fed’s example, .00354 × ($18,800 + $12,350), gives $110.27 a month.

Does a down payment lower a lease payment?

Yes, both the depreciation and the rent charge fall. $2,700 down on the default lease cuts it to $244.65.

What is not included?

Fees due at signing, registration, excess mileage and wear charges and the disposition fee at the end.

Sources and methodology

The formulas are standard time-value-of-money results. We check every figure against golden values worked out independently, by closed form and by month-by-month simulation; see the methodology.

Written and maintained by Nitin Raturi, a software engineer (about the author). Last reviewed 4 Nov 2026; next review due by . Found an error? Tell us.

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