Automobile Lease Calculator to
Calculate Car Lease Payment

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Help you to estimate a vehicle lease payment and provide you with instructions on how to save up so you can pay cash for a car.

This free online Automobile Lease Calculator will calculate a car lease payment plus give you a breakdown of how much of each payment will be going to depreciation, leasing fees, and sales taxes.

And unlike other online car lease calculators, the automobile lease calculator on this page will also calculate the money factor from a new car lending rate, and visa versa. Plus it will also calculate the depreciation percentage from the residual value, and visa versa.

An Automobile Lease is an Automobile Loan

Don't be fooled, a lease is just another type of loan. After all, the only difference between a car loan and a car lease, is that in the former case you are borrowing cash (an asset) to buy the car, and in the latter case your are borrowing the value of the car (also an asset). In both cases you will need to pay a rental fee on the asset you borrowed (interest charges on the cash borrowed or leasing fees on the car value borrowed).

And because a lease is a type of loan, the fact remains that whether you lease or buy, you will still be spending more to drive the car than you would have to if you had saved up and paid cash for the car.

Plus, because you will be leasing a "new" car instead of purchasing a "used" car, you will suffer the same warp-speed depreciation that comes from buying new instead of used (see the Car Depreciation Calculator). Buying or leasing a new car every 1-2 years is one of the fastest destroyers of potential future wealth ever known to mankind.

For these reasons, and because I see "borrowing value to be repaid with interest" as nothing more than a legal way for the super-wealthy to inconspicuously siphon money out of the pockets of average hard-working Joes and Janes, the only car acquisition method I recommend is to save up and pay cash for a used car.

I realize that because we weren't raised to grow slow, paying as we go, paying cash for a vehicle is probably not an option for you at this very moment -- thanks to all of the borrowing from tomorrow you've done in the past. But that doesn't mean you should give up on the idea all together.

How to Pay Cash for a Car

So how do you go from borrowing to acquire vehicles to paying cash for them so you can save thousands, even tens of thousands of dollars in finance charges and/or leasing fees over the course of your lifetime? Start small and work your way up.

The best way to get into the habit of paying cash for everything you buy, is to start with small expenditures. If you stop borrowing money to pay for all of the relatively small purchases that most people put on their credit cards, eventually you will rid yourself of monthly credit card payments.

Then, once you no longer have any credit card payments you can then begin to redirect those payments into a "depreciation account."

What's a depreciation account? It's an account you use to pay cash to replace your assets as they wear out. In other words, it's where all of your monthly payments should be going.

In any case, as you form your habit of paying cash for everything you buy, and faithfully deposit the payment savings into your depreciation account, you will be able to make larger and larger down payments on your future car purchases.

Then, if you stay fully committed to paying cash for all of the small purchases, you will eventually be able to pay cash for a car. But take it from me, you probably won't like the feeling you get when you hand a car dealer $25,000 in cash. What does that tell you? That's the feeling you need to feel when you part with that much of your hard-earned money!

With that, let's use the Automobile Lease Calculator to calculate a car lease payment and the breakdown of its components (depreciation, leasing fees, and sales taxes).

Calculate Car Lease Payment

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Instructions: Enter the MSRP, the final negotiated price, any added lease costs, any down payment amount, and any trade-in credit.

Next, enter your local sales tax rate and the number of months in the auto leasing term.

Next enter either the money factor or the new car lending rate and also enter either the residual value percentage or the residual value amount.

Finally, click the "Calculate Car Lease Payment" button and scroll down to view the results.

Mouse over the blue question marks for a further explanation of each entry field. More in-depth explanations can be found in the glossary of terms located beneath the Automobile Lease Calculator.

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Help Sticker price or MSRP ($):
Help Negotiated price after incentives ($):
Help Additional lease costs not paid upfront ($):
Help Down payment ($):
Help Trade-in credit ($):
Help Sales tax (%):
Help Length of lease (months):
Help Lease rate: Money factor or APR %
Help Residual value: Residual % or Residual $
Help Capitalized cost:
Help Lease cost:
Help Residual value:
Help Monthly depreciation fee:
Help Monthly lease fee:
Help Before-tax monthly lease payment:
Help Monthly sales tax payment:
Help Monthly lease payment:
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Automobile Lease Calculator Glossary of Terms

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Sticker price or MSRP: The sticker price of the vehicle plus the cost of any additional options. Note that MSRP stands for Manufacturer Suggested Retail Price and is usually displayed on the sticker attached to the new vehicle.

Negotiated price after incentives: The agreed upon price after negotiation and after subtracting dealer incentives. This figure is commonly referred to as the Net Capitalized Cost.

Down payment: Enter the total of any down payment you plan to make. If none, enter 0 or leave blank. Note that when you make a down payment on a lease you may need to pay sales tax on that amount upfront. This is because what you are really doing is pre-paying depreciation, which in most cases is taxable (varies from state to state).

Trade-in credit: Enter any credit you received for a vehicle trade-in. If none, enter 0 or leave blank.

Sales tax: The total state and local tax rate (otherwise referred to as usage tax) that will apply to the lease. Enter as a percentage (for .06, enter 6%).

Length of lease: Enter the number of months you will be leasing the car for. Most leases are for 24, 36, or 48 months). Note that lease terms beyond 36 months tend to eliminate any benefits that might be gained from leasing instead of buying.

Lease rate: If you know the money factor, click the Money factor option and enter the factor in the adjacent field. If do not know the money factor, click the APR option and enter the new car lending rate (as a percentage) in the adjacent field. In the latter case, the automobile lease calculator will calculate the money factor for you and display it in parenthesis on the Monthly lease fee result row.

Residual value: If you know the percentage the leasing company will use to determine the residual value (typically 50%-58% for a 36- month lease), click the Residual % option and enter the percentage in the adjacent field. If you do not know the residual percentage, click the Residual $ option and enter the anticipated dollar value of the car at the end of the lease in the adjacent field. In the latter case, the automobile lease calculator will calculate the residual percentage for you and display it in parenthesis on the Residual value result row.

Capitalized cost: (often referred to as the "Cap Cost") is the total MSRP (Manufacturer Suggested Retail Price) as entered in the top portion of the automobile lease calculator.

Lease cost: This is the Net Capitalized Cost as entered into the top portion of the automobile lease calculator (the Capitalized Cost less any dealer incentives and negotiated price reductions).

Residual value: This is the projected value of the car at the end of the lease. In other words, if you wish to purchase the car after the leasing term has expired, this is what you might expect to pay for it. The automobile lease calculator will display the residual percentage in parenthesis on this line.

Monthly depreciation fee: This is how much of your monthly lease payment will be going to pay for depreciation. The automobile lease calculator arrives at this result by dividing the total reduction in value by the number of months of the leasing term.

Monthly lease fee: This is the portion of your monthly payment that will be paid to the leasing company. This is essentially the same thing as the interest charges you would pay to a finance company (bank) if you are purchasing the vehicle instead of leasing it.

Before-tax monthly lease payment: This is the total of your monthly depreciation payment and your monthly leasing fee payment. Think of it as the Principal and Interest payment on an automobile loan.

Monthly sales tax payment: This is your monthly lease payment multiplied by the total of your state and local sales tax rates. In most states you will need to pay sales tax on the amount of each of your monthly leasing payments (some states require all sales taxes be paid upfront). This basically means that you are paying sales taxes on the leasing fee (finance charges) -- which is not the case when you make a car loan payment.

Monthly lease payment: This is the combined total of your monthly depreciation, leasing fee, and sales tax payments.

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