Auto Lease Calculator
= $19,250
= 3.00% APR
Lease Tips
- ✓Negotiate the price before discussing the lease
- ✓Lower money factor = lower interest charges
- ✓Higher residual value = lower monthly payments
- ✓Watch for excessive fees and markups
Related Calculators
Understanding Auto Leases
How Lease Payments Work
Unlike a loan where you pay for the entire vehicle, a lease payment is based on the vehicle's depreciation during the lease term plus interest charges.
Key Lease Terms
Capitalized Cost (Cap Cost)
The negotiated price of the vehicle plus any fees. Lower cap cost = lower payments.
Residual Value
The vehicle's estimated value at lease end. Higher residual = lower payments.
Money Factor
The lease equivalent of an interest rate. Multiply by 2400 to get APR equivalent.
Acquisition Fee
A fee charged by the leasing company, typically $500-$1,000. Sometimes negotiable.
Lease vs. Buy Comparison
| Factor | Lease | Buy |
|---|---|---|
| Monthly Payment | Lower | Higher |
| Ownership | No equity built | Build equity over time |
| Mileage | Limited (fees for excess) | Unlimited |
| End of Term | Return or buy | Own the vehicle |
Money Factor to APR
To convert money factor to APR, multiply by 2400. For example, a money factor of 0.00125 equals 3% APR (0.00125 x 2400 = 3.0). Compare this to loan rates when deciding between leasing and buying.
Watch Out For
- Excessive mileage limits (12,000/year is common)
- Wear and tear charges at lease end
- Early termination fees
- Gap insurance requirements
Frequently Asked Questions
How is a car lease payment calculated?
A lease payment consists of the depreciation fee (the difference between the car's price and residual value divided by lease term), plus a finance fee (calculated using the money factor), plus applicable taxes. The formula is: Monthly Payment = Depreciation Fee + Finance Fee + Tax.
What is a money factor in a car lease?
The money factor is the lease equivalent of an interest rate. To convert it to an APR, multiply by 2400. For example, a money factor of 0.00125 equals 3% APR. Lower money factors mean lower interest charges on your lease.
What is residual value and why does it matter?
Residual value is the estimated worth of the vehicle at the end of the lease term. A higher residual value means lower monthly payments because you're paying for less depreciation. Vehicles that hold their value well typically have better lease terms.
Is it better to lease or buy a car?
It depends on your situation. Leasing offers lower monthly payments and allows driving newer cars, but you never build equity and face mileage limits. Buying costs more monthly but results in ownership. Lease if you prefer new cars every few years; buy if you keep cars long-term.