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Calculate A Car Lease Payment

Lease Payment Formula:

\[ Payment = \frac{(Cap\ Cost - Residual)}{Term} + Interest \]

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1. What is a Car Lease Payment?

A car lease payment is the monthly amount you pay to drive a vehicle you don't own. It's calculated based on the vehicle's depreciation during the lease term plus financing charges.

2. How Does the Calculator Work?

The calculator uses the lease payment formula:

\[ Payment = \frac{(Cap\ Cost - Residual)}{Term} + Interest \]

Where:

Explanation: The formula calculates the monthly depreciation amount plus the finance charge to determine your total monthly payment.

3. Importance of Lease Calculation

Details: Understanding how lease payments are calculated helps you negotiate better terms and compare lease offers effectively.

4. Using the Calculator

Tips: Enter all values in dollars. Cap cost should be the negotiated price after any down payment or trade-in. Residual value is typically provided by the leasing company.

5. Frequently Asked Questions (FAQ)

Q1: What's included in the cap cost?
A: Cap cost includes the vehicle price plus any fees or add-ons, minus any down payment or trade-in value.

Q2: How is residual value determined?
A: The leasing company estimates the vehicle's future value based on make, model, term, and mileage allowance.

Q3: Can I negotiate the lease terms?
A: Yes, you can negotiate the cap cost, money factor (interest), and sometimes the residual value.

Q4: What's a good lease payment?
A: A good rule of thumb is that the monthly payment should be less than 1% of the vehicle's MSRP.

Q5: Are there other fees involved in leasing?
A: Yes, leases typically include acquisition fees, disposition fees, and possibly security deposits not reflected in this calculation.

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