Lease Calculator

A lease payment consists of two components: depreciation (the asset's value loss over the lease term) and interest (the cost of financing). The depreciation portion is calculated by dividing the difference between the asset price and residual value by the lease term. The interest portion is calculated using the money factor (interest rate divided by 24) applied to the sum of the asset price and residual value.

1. 1

   Step 1

   Enter the total asset price (MSRP or negotiated price)

2. 2

   Step 2

   Input the residual value (estimated end-of-lease value, typically 50-60% for 3-year vehicle leases)

3. 3

   Step 3: Specify the lease term in months (common terms

   24, 36, or 48 months)

4. 4

   Step 4

   Enter the annual interest rate (also called money factor when expressed as rate/2400)

5. 5

   Step 5

   Calculator computes depreciation and interest components

6. 6

   Step 6

   Result shows your total monthly lease payment and cost breakdown

• 1

  Lower residual value means higher monthly payments - negotiate a higher residual to reduce payments

• 2

  Money factor is interest rate divided by 2400. A 5% APR = 0.00208 money factor

• 3

  Typical vehicle residual values: 50-60% for 3 years, 40-50% for 4 years

• 4

  Consider capitalized cost reduction (down payment) to lower monthly payments

• 5

  End-of-lease options: buy at residual value, return the vehicle, or extend the lease

• Ignoring Residual Value

• Not Considering Total Cost

• Confusing Money Factor with APR

• Overlooking Mileage Limits