Lease Payment Calculator
Calculate monthly lease payments for a car or equipment.
Enter capitalized cost, residual value, lease term, and money factor to find your exact monthly payment and total cost.
How Lease Payments Are Calculated
A lease payment has two components: the depreciation fee and the finance fee.
Depreciation Fee covers the value the asset loses over the lease term:
Depreciation Fee = (Capitalized Cost − Residual Value) ÷ Lease Term (months)
Finance Fee is the interest charge on the combined value of the asset:
Finance Fee = (Capitalized Cost + Residual Value) × Money Factor
Total Monthly Payment:
Monthly Payment = Depreciation Fee + Finance Fee
Converting APR to Money Factor
Dealers quote money factor, but you may know the APR:
Money Factor = APR ÷ 2400
For example, a 3% APR equals a money factor of 0.00125.
Key Terms Defined
- Capitalized Cost (Cap Cost): The negotiated price of the vehicle or equipment — the starting value of the lease.
- Residual Value: The estimated value at the end of the lease term. A higher residual = lower monthly payment.
- Money Factor: The lease equivalent of an interest rate. Multiply by 2400 to convert to APR.
- Lease Term: The number of months in the lease contract (typically 24, 36, or 48 months).
Worked Example
A $35,000 car with an $18,000 residual value, 36-month lease, money factor 0.00125:
- Depreciation Fee = ($35,000 − $18,000) ÷ 36 = $472.22/month
- Finance Fee = ($35,000 + $18,000) × 0.00125 = $66.25/month
- Monthly Payment = $472.22 + $66.25 = $538.47
- Total paid over lease = $538.47 × 36 = $19,384.92
- Total interest (finance charges) = $66.25 × 36 = $2,385.00
Lease Term Comparison (same car, $35K cap cost, $18K residual, 0.00125 MF)
| Term | Monthly Payment | Total Paid |
|---|---|---|
| 24 months | $625.00 + $66.25 = $691.25 | $16,590 |
| 36 months | $472.22 + $66.25 = $538.47 | $19,385 |
| 48 months | $354.17 + $66.25 = $420.42 | $20,180 |
Pro Tips
- Negotiate the cap cost, not just the monthly payment. A lower cap cost reduces both fees.
- A higher residual value significantly lowers your payment — favor makes with strong residual values (Toyota, Honda, BMW typically hold value well).
- Money factors below 0.00100 are excellent deals. Above 0.00250 is expensive.
- Always ask the dealer for the money factor and residual value in writing before signing.
- Sales tax and fees are not included in this base formula — add them separately.