Car Lease Calculator

A monthly lease payment has two parts: depreciation ((cap cost − residual value) ÷ months) and finance charge ((cap cost + residual) × money factor). Add them, then add sales tax. A $40,000 car with a 60% residual after 36 months ($24,000) at a 0.0015 money factor (~3.6% APR) costs about $445/month before tax.

The money factor is the lease equivalent of an interest rate, but expressed as a small decimal. To convert: APR = money factor × 2,400. A 0.0015 money factor equals 3.6% APR. Always ask the dealer for the money factor (or APR) - it's the closest thing to negotiable financing on a lease.

Over 3 years, leasing typically has lower monthly payments. Long-term, buying and keeping a car for 7+ years is almost always cheaper because you eventually own a paid-off vehicle. The break-even depends on residual values, interest rates, and how much you drive. Use this calculator alongside the Auto Loan Calculator to compare specific scenarios.

Mileage caps (typically 10,000–15,000/year, with $0.15–$0.30/mile overage), wear-and-tear charges at lease-end, no equity, often no early-exit option without big penalties, and continuous monthly payments forever if you keep leasing. Leasing makes the most sense for people who want a new car every 2–4 years and don't drive heavy miles.