By Meraj Uddin Provat · Last reviewed September 16, 2026 · Editorial Standards
Car Lease Payment Calculator
Work out a monthly lease payment from the numbers on the dealer sheet — and see exactly how much of it is depreciation and how much is interest.
Estimates for planning only, not financial advice. Excludes insurance, registration, mileage-overage charges and any end-of-lease disposition fee. Sales tax treatment varies by state; this uses the common monthly-payment method.
How a lease payment is built
A lease is not a loan on a cheaper car. You are paying for the slice of the vehicle you use up during the term, plus interest on the money the leasing company has tied up. That splits cleanly into two charges:
Depreciation charge = (capitalized cost − residual value) ÷ term in months
Rent charge = (capitalized cost + residual value) × money factor
Add them together, add sales tax, and you have the monthly payment. That is the whole formula — there is nothing else hidden in it.
The three numbers that decide your payment
| Input | Who sets it | What it does |
|---|---|---|
| Capitalized cost | You, by negotiating | The price the lease is built on. Lower is better. |
| Residual value | The leasing company | Predicted end-of-lease value, as a % of MSRP. Higher is better for you. |
| Money factor | The leasing company | The interest rate in disguise. Multiply by 2,400 for the APR. |
Only the first one is yours to move, and it is the one buyers most often forget to negotiate because the monthly payment is what gets discussed. On a 36-month lease, every $1,000 off the capitalized cost takes about $28 to $30 off the monthly payment.
A quick sanity check on the other two: if a dealer will not tell you the money factor as a number, ask again. Converting it takes one multiplication, and 0.00250 reads very differently once you see it is about 6% APR.
Why manufacturer lease deals look so cheap
Kelley Blue Book put the average new-vehicle transaction price at $49,855 in July 2026, and Experian put the average new lease payment at $619 a month in Q1 2026. Those two figures do not reconcile at an ordinary interest rate:
| Scenario | Residual | Money factor | Monthly payment |
|---|---|---|---|
| Market rate | 55% | 0.00250 (~6.0% APR) | $816 |
| Subsidised rate | 55% | 0.00125 (~3.0% APR) | $720 |
| Strong residual + subsidised | 62% | 0.00125 (~3.0% APR) | $627 |
Only the bottom row lands near the real-world average. That is what an advertised lease special actually is: the manufacturer props up the residual value and buys down the money factor. Neither lever is available to you by negotiating — which is why the advertised deal on one model can be far better value than a harder bargain on another.
What this calculator leaves out
Insurance, registration and title, mileage-overage charges (commonly 15 to 25 cents per mile beyond your allowance), wear-and-tear charges, and any end-of-lease disposition fee. It also assumes the common monthly-payment sales tax method — a few states, Texas among them, tax the full vehicle price at the start instead, so check your own state's rule before relying on the tax line.
One thing worth weighing that no calculator shows: a cash down payment on a lease is not equity. If the car is stolen or written off early, that money is generally gone, because the insurance settlement goes to the leasing company rather than to you.
Run the comparison too
This calculator tells you what a lease costs. It does not tell you whether leasing is the right call — for that you need the total cost of leasing set against the total cost of buying the same car. The free Lease vs Buy a Car Calculator runs that comparison, and lease vs buy a car in 2026 works through where the crossover actually falls.
Financing instead? The Auto Loan Calculator gives the real payment with tax and fees, the Car Affordability Calculator shows what price your income supports, and how much car you can afford in 2026 covers the rules of thumb. Already financing at a high rate? Compare with the Auto Refinance Calculator.
Frequently asked questions
How is a car lease payment calculated?
A lease payment is two charges added together. The depreciation charge is the capitalized cost minus the residual value, divided by the number of months. The rent charge, which is the interest, is the capitalized cost plus the residual value, multiplied by the money factor. Add sales tax to the total and that is your monthly payment.
What is a money factor and how do I convert it to an interest rate?
The money factor is the lease equivalent of an interest rate, written as a small decimal. Multiply it by 2,400 to get the approximate APR: a money factor of 0.00125 is about 3% and 0.00250 is about 6%. Dealers often quote the money factor rather than the rate because the decimal looks harmless.
What is residual value and can I negotiate it?
Residual value is what the leasing company predicts the car will be worth when the lease ends, expressed as a percentage of MSRP rather than of your negotiated price. You cannot negotiate it. A higher residual means less depreciation to pay for, which lowers your monthly payment, so a strong-residual car leases well.
What part of a lease is actually negotiable?
The capitalized cost, which is the vehicle price the lease is built on. Residual value and money factor are set by the leasing company. On a 36-month lease, every $1,000 you take off the capitalized cost removes about $28 to $30 from the monthly payment, so negotiating the price matters as much on a lease as on a purchase.
Does a bigger down payment on a lease save money?
It lowers the monthly payment but it does not save much overall, and it carries a real risk. A cap cost reduction is not equity. If the car is written off or stolen early in the lease, that cash is generally gone, because the insurance settlement goes to the leasing company. Many people deliberately put little or nothing down on a lease for this reason.
How is sales tax charged on a lease?
It depends on your state. Most states tax each monthly payment, which is the method this calculator uses. A few, including Texas, tax the full vehicle price at the start of the lease instead, and some others tax the total of the payments upfront. Check your own state's rule before relying on the tax line.
Methodology
Depreciation charge is (capitalized cost minus residual value) divided by the term in months. Rent charge is (capitalized cost plus residual value) multiplied by the money factor, where money factor equals APR divided by 2,400. Residual value is computed as a percentage of MSRP, not of the negotiated price, which is how leasing companies actually set it. Sales tax is applied to the monthly payment. Due at signing is cash down plus upfront fees plus the first monthly payment. Total cost of lease is due at signing plus the remaining monthly payments. Benchmark figures cited above come from Kelley Blue Book / Cox Automotive (average transaction price, July 2026) and Experian (average lease payment, Q1 2026). Estimates for education and planning only; not financial, tax or legal advice.