What is the money factor?

The money factor is the lease equivalent of an interest rate, expressed as a small decimal. Multiply it by 2,400 to get the approximate APR (so a money factor of 0.0025 ≈ 6% APR). Dealers quote the money factor; lower is better.

What is residual value and why does it matter?

Residual value is the car’s predicted worth at the end of the lease, set as a percentage of MSRP. A higher residual means the car depreciates less during your lease, lowering your payment — which is why brands that hold value well are cheaper to lease.

Does a down payment lower my lease payment?

Yes, a down payment (capitalized cost reduction) lowers the amount financed and thus both the depreciation and rent portions. However, putting a lot down on a lease is risky: if the car is totaled or stolen early, you may not get that money back.

Is sales tax included?

It depends on your state. Many states tax the monthly payment (enter your rate here); others tax the full price or the down payment upfront. This calculator can add tax to the monthly payment as an option.

What costs does this not include?

Acquisition (bank) fees, disposition fees at lease end, registration and title fees, and any mileage-overage or wear-and-tear charges. Those are added on top of the base payment this tool estimates.

What is the money factor?

The money factor is the lease equivalent of an interest rate, expressed as a small decimal. Multiply it by 2,400 to get the approximate APR (so a money factor of 0.0025 ≈ 6% APR). Dealers quote the money factor; lower is better.

What is residual value and why does it matter?

Residual value is the car’s predicted worth at the end of the lease, set as a percentage of MSRP. A higher residual means the car depreciates less during your lease, lowering your payment — which is why brands that hold value well are cheaper to lease.

Does a down payment lower my lease payment?

Yes, a down payment (capitalized cost reduction) lowers the amount financed and thus both the depreciation and rent portions. However, putting a lot down on a lease is risky: if the car is totaled or stolen early, you may not get that money back.

Is sales tax included?

It depends on your state. Many states tax the monthly payment (enter your rate here); others tax the full price or the down payment upfront. This calculator can add tax to the monthly payment as an option.

What costs does this not include?

Acquisition (bank) fees, disposition fees at lease end, registration and title fees, and any mileage-overage or wear-and-tear charges. Those are added on top of the base payment this tool estimates.

Car Lease Payment Calculator (Residual Value)

Estimate a monthly car lease payment from the vehicle price, residual value, money factor (or APR), and lease term.

Result

Estimated monthly payment

$655.00

depreciation $500.00 + finance $155.00

Capitalized cost (after down)$40,000.00
Residual value$22,000.00 (55%)
Money factor (APR ÷ 2400)0.00250
Depreciation portion$500.00/mo
Finance (rent) portion$155.00/mo
Base monthly payment$655.00
Total of payments$23,580.00

Source: Lease payment = depreciation + finance (rent) charge. Depreciation = (cap cost − residual) ÷ months. Rent = (cap cost + residual) × money factor, where MF = APR ÷ 2400.

Not financial advice — Estimate of the base payment. Real leases add acquisition/disposition fees, registration, and possibly tax on the full payment (varies by state). The money factor from the dealer may differ from APR ÷ 2400.

Step-by-step

Residual = price × residual% = $40,000.00 × 55% = $22,000.00.
Depreciation = (cap cost − residual) ÷ months = ($40,000.00 − $22,000.00) ÷ 36 = $500.00.
Finance charge = (cap cost + residual) × money factor = ($40,000.00 + $22,000.00) × 0.00250 = $155.00; payment = $655.00.

How to use this calculator

Enter the negotiated price (capitalized cost) and the residual value percentage.
Enter the lease term in months and the APR (the tool converts it to a money factor).
Add any down payment and, optionally, the sales-tax rate on the payment.
Read the monthly payment split into depreciation and finance charge.

About this calculator

A car lease payment has two parts, and understanding both helps you spot a good deal. The depreciation portion covers the value the car loses during the lease: the negotiated price (capitalized cost) minus the residual value the car is predicted to be worth at lease end, spread over the term. The finance portion — the "rent charge" — is interest on the money tied up, calculated from the money factor, a small decimal that equals the APR divided by 2,400. This calculator computes both from the vehicle price, residual percentage, term, and APR (or money factor), and adds optional down payment and sales tax. A higher residual value lowers depreciation and thus your payment, which is why cars that hold their value lease cheaply. The result is the base monthly payment; real leases also add acquisition and registration fees.

How it works — the formula

Residual = Price × Residual%
Depreciation = (Cap cost − Residual) ÷ Months
Rent = (Cap cost + Residual) × Money factor   [MF = APR ÷ 2400]
Payment = Depreciation + Rent (+ tax)

Depreciation amortizes value lost over the term; the rent charge is interest on the average capital outstanding (cap cost plus residual).

Source: CFPB — Leasing a Car

Worked examples

Example 1

$40k, 55% residual, 36 mo, 6% APR

Inputs:: price=40000, residualPct=55, months=36, apr=6
Output:: dep $500 + rent $155 = $655/mo

Example 2

$30k, 60% residual, 36 mo, 4% APR

Inputs:: price=30000, residualPct=60, months=36, apr=4
Output:: ~$353/mo base

Example 3

$50k, 50% residual, 24 mo, 0% APR

Inputs:: price=50000, residualPct=50, months=24, apr=0
Output:: pure depreciation ~$1,042/mo

Limitations

Base payment only; excludes acquisition/disposition/registration fees.
Money factor approximated as APR ÷ 2400; dealer MF may differ.
Tax treatment varies by state.

Estimate; confirm money factor, residual, and fees on the lease contract.

Frequently asked

It is depreciation plus a finance charge. Depreciation = (capitalized cost − residual value) ÷ months. Finance charge = (capitalized cost + residual value) × money factor. Add them for the base monthly payment, then add tax and fees.