Estimate your monthly lease payment by using our car lease payment calculator. Finding out how much money it will cost to lease a new car, truck, or SUV is quick and easy with our lease calculator. Leasing a car has more variables than buying a car, but we are here to help shed some light on the ins and outs of auto leases.
Calculating a lease payment is a little more complicated than calculating a loan payment, but many of the factors overlap. Mileage is a big factor when leasing a car, and most leases allow between 10,000 – 15,000 miles per year. Higher mileage leases are going to cost more money due to the car having a lower residual value at the end of the lease.
To calculate a monthly lease payment on a new car, you will need five essential pieces of information:
|How To Calculate a Lease Payment (36-Months)|
|1.||Sticker Price (MSRP)||$40,000|
|2.||Residual Value Percentage||57%|
|4.||Car Purchase Price||$38,000|
|6.||Gross Capitalized Cost||$39,300|
|7.||Down payment & Incentives||$3,000|
|8.||Adjusted Capitalized Cost||$36,300|
|11.||Monthly Rent Charge (Money Factor .0020833)||$123|
|12.||Pre-Tax Lease Payment||$498|
|13.||Total Lease Payment (Sales Tax 6.5%)||$530.48|
If you’re interested in learning more about the car leasing equation, be sure to read our article on how to calculate a lease payment.
Length of vehicle ownership is one of the most significant determining factors in whether a car lease or a car loan is a better financial option. If a car will be driven for less than three years, then leasing makes a lot of sense. However, buying will make more sense if you plan to own your car for more than a few years or would like to modify it beyond OEM accessories.
A car’s residual value is largely determined by its age and mileage. Car lease terms usually range from 24 – 36 months, but some extended leases go up to 48 months and beyond. With some manufacturer’s bumper-to-bumper warranties expiring after 36 months, would you want to replace parts on a car that you will only own for a few more months? average annual mileage was 13,476 in 2018. Leases typically allow for between 10,000 – 15,000 miles per year, and additional miles will result in fees.
In addition to vehicle usage, some makes and models tend to have better residual values than others. Leasing a new car, truck, or SUV with a high resale value will typically yield a lower monthly lease payment.
With the price of new cars, trucks, and SUVs, continuing to rise, leasing is becoming more appealing to shoppers who want to keep their monthly payments lower. If you’re lucky enough to take advantage of a subsidized lease, then you can rest assured knowing that you have a car lease with great terms. Car leases can be subsidized in two ways that both lower the monthly payment of a vehicle. However, one of the ways will make your lease less desirable if you have any intention of buying the car at the end of the lease.
Decreased Purchase Price – Lowering the purchase price of a new car helps to lower the amount of depreciation of a car since it started at a lower price. A lease with a lower purchase price won’t negatively impact the lessee if they wish to buy the car at the end of the term
Increased Residual Value – Another way that a car leases monthly payment can be lowered is by increasing the residual value. Increasing the residual value of the car can be an issue if you are considering leasing to buy.
Still interested in learning more about car leases? Visit the complete guide to leasing.
You can calculate the monthly lease payment on a new vehicle – or at least come up with a decent estimate – using straightforward mathematics involving eight steps. You’ll need to collect certain information from the lender whether you do the math longhand or use an online lease payment calculator.
Using a do-it-yourself method of calculating the lease payment on a new truck or car will not be completely accurate. There are many variables from car to car, lender to lender, and consumer to consumer. Fees can vary by manufacturer, and taxes vary by region. These fluctuating factors make it challenging to make a lease payment calculation that is accurate to the dollar.
Car shoppers who are new to leasing might be unfamiliar with some terminology in the fine print. “Money factor” in the lease language means interest rate. It may also be called “lease factor” or even “rent fee.” This number contains several decimal places. To convert it to a familiar-looking APR interest rate, multiply it by 2,400. For example, a money factor of 0.00125 equates to a 3% interest rate.
The residual value is the estimate of what a vehicle will be worth at the end of the lease term. In other words, how much the car will depreciate. This figure is expressed as a percentage of the car’s list price. The estimated value looks different from lender to lender. It can even vary based on model trim levels.
Use our car lease payment calculator to determine how much your monthly payment will be for your next vehicle. You can get an accurate estimate by entering details, including the cost of the car, money factor, down payment information, fees, lease term, and your credit score tier.
You will need to contact the specific lender – or dealer if using a captive finance company – to establish the residual value of a particular truck or car. However, you can work up an estimate on your own. The percentage typically gets calculated by subtracting the estimated car depreciation value from the original MSRP.
You can compute the monthly lease payments for a new vehicle. Let’s say you have your eyes on a 2022 Ford Bronco Sport SUV, and you negotiate a price of $32,000.
We’ll also use these factors:
Here are the steps to take to calculate car lease payments:
Step 1 — $32,000 x 70% = $22,400 (Residual Value or RV)
Step 2 — $32,000 + $1,500 = $33,500 (Price plus Fees = Gross Capitalized Cost or GCC)
Step 3 — $5,000 + $600 = $5,600 (Down Payment plus Rebate = Capitalized Cost Reduction or CCR)
Step 4 — $33,500 – $5,600 = $27,900 (GCC minus CCR = Adjusted Capitalized Cost or ACC)
Step 5 — $27,900 – $22,400 = $5,500 (ACC minus RV = Depreciation or Lost Value over lease period)
Step 6 — $5,500 ÷ 36 = $152.78 (Depreciation divided by Lease Length = Base Monthly Payment)
Step 7 — $27,900 + $22,400 = $50,300 x 0.00100 = $50.30 (ACC plus RV times Money Factor equals Monthly Interest)
Step 8 — $152.78 + $50.30 = $203.08 (Base Monthly Payment plus Interest equals Monthly Lease Payment before taxes)
For most states, any state or city sales taxes that apply should be calculated and added to the monthly payment.
Leases often look attractive to car shoppers because of the lower monthly car payments shown in advertisements. Figuring the real cost of leasing isn’t as simple as multiplying the monthly fee by the length of the lease. It’s essential to pay attention to the “cash due at signing” line seen in lease advertisements when you evaluate the total lease cost. Be sure you include the down payment, fees, taxes, and the disposition charge (when you turn in the car) to calculate how much money you will spend on leasing a car. Paying $3,600 as a down payment to initiate the lease is the equivalent of $100 extra per month throughout a 36-month lease.
There are pros and cons to leasing a car and advantages and disadvantages to purchasing an automobile. Entering a car lease may be the right choice for car shoppers who enjoy driving a new vehicle every few years and do not want to pay a significant down payment. Everyone has different needs, financial situations, and lifestyles.