What is the Lease Payment Calculator?
This tool estimates the monthly payment on a vehicle lease (US-style auto leasing conventions) using the capitalized cost, residual value, lease term, and money factor. It splits the payment into a depreciation portion and a finance (rent) charge, and adds sales tax on the monthly payment.
How to use it
Enter the negotiated capitalized cost (the agreed vehicle price), the residual value (what the car is worth at lease-end), the lease term in months, the money factor (a small decimal lessors use instead of an interest rate), and your local sales tax rate. The calculator returns your estimated monthly payment plus a breakdown.
The formula explained
The base payment is the sum of two parts. Depreciation \(= (\text{CapCost} - \text{Residual}) \div \text{Term}\) spreads the value lost over the lease. The finance charge \(= (\text{CapCost} + \text{Residual}) \times \text{MoneyFactor}\) approximates interest on the average balance. Multiply the money factor by 2400 to get the equivalent APR. Sales tax is then applied to the monthly payment.
$$\begin{gathered} M = (D + F)\left(1 + \frac{\text{Tax \%}}{100}\right) \\[1.5em] \text{where}\quad \left\{ \begin{aligned} D &= \frac{\text{Cap Cost} - \text{Residual}}{\text{Term}} \\ F &= \left(\text{Cap Cost} + \text{Residual}\right)\text{Money Factor} \end{aligned} \right. \end{gathered}$$
Worked example
CapCost $35,000, Residual $21,000, Term 36 months, Money Factor 0.0025, Tax 8%.
$$\text{Depreciation} = \frac{35000 - 21000}{36} = \$388.89$$ $$\text{Finance} = (35000 + 21000) \times 0.0025 = \$140.00$$ $$\text{Base} = \$528.89$$ $$\text{Tax} = 528.89 \times 8\% = \$42.31$$ $$\text{Monthly payment} \approx \$571.20$$FAQ
What is a money factor? It's the lease equivalent of an interest rate. Multiply by 2400 to convert to an approximate APR \((0.0025 \times 2400 = 6\%)\).
Is tax on the whole payment? In most US states tax is charged on the full monthly payment; some states tax only depreciation. This tool taxes the full monthly payment.
Are fees included? No — acquisition fees, down payments, and registration are not included in this estimate.
