Lease Payment Calculator
A lease payment is built from three parts that dealers rarely separate: depreciation, a rent charge, and tax. This calculator assembles them from vehicle price, residual value, term and money factor, so you can see which lever is actually driving the monthly figure you are being quoted.
Inputs
Result
554.17 / month
Depreciation 416.67 · Finance 137.5
How the lease payment calculator works
Depreciation charge = (capitalised cost − residual value) ÷ term in months. This is the portion of the car you are consuming.
Rent charge = (capitalised cost + residual value) × money factor. Money factor × 2400 gives the equivalent annual interest rate.
Monthly payment = depreciation + rent charge, plus tax where applicable. Capitalised cost is the negotiated price less any down payment or trade-in.
Worked example: 42,000 vehicle, 36-month lease
- Negotiated price 39,500, down payment 2,500, so capitalised cost is 37,000.
- Residual 55% of MSRP: 42,000 × 0.55 = 23,100.
- Depreciation: (37,000 − 23,100) ÷ 36 = 386.11.
- Money factor 0.00175 (equivalent to 4.2%): rent charge = (37,000 + 23,100) × 0.00175 = 105.18.
- Payment before tax: 491.29. Total of payments plus down payment: 20,187 for three years of use.
Common mistakes to avoid
Negotiating the payment instead of the capitalised cost
A dealer can hit any monthly figure by extending the term or raising the money factor. Negotiate the price first, then check the payment maths.
Not converting the money factor
A money factor of 0.0025 looks tiny but equals 6% interest. Always multiply by 2400 before judging whether the financing is competitive.
Making a large down payment on a lease
Capitalised cost reduction is not equity. If the car is totalled early, that money is generally gone — unlike a deposit on a purchase.
Frequently asked questions
What is a money factor?
The lease equivalent of an interest rate. Multiply it by 2400 to get the annual percentage rate: 0.00175 equals 4.2%.
What is residual value?
The lender's estimate of the car's worth at lease end, set as a percentage of MSRP. A higher residual means less depreciation to pay for and a lower payment.
Is leasing cheaper than buying?
Cheaper monthly, more expensive over a decade, because you never stop making payments. Leasing wins on cash flow and warranty coverage, buying wins on lifetime cost.
What happens if I exceed the mileage allowance?
You pay an excess charge, commonly 0.15–0.30 per unit of distance. Estimate honestly upfront; buying extra miles in advance is usually cheaper.
Can I end a lease early?
Usually only by paying the remaining payments or a stated termination fee. Transferring the lease, where permitted, is often cheaper.
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