Enter the vehicle price, residual value, money factor, term, down payment, and sales tax rate to estimate the depreciation fee, rent charge, and total monthly payment.
A money factor is the lease industry's way of writing the interest rate as a small decimal — like 0.00125 — instead of a percentage. To see the APR-equivalent rate, multiply the money factor by 2400: 0.00125 × 2400 = 3.0% APR-equivalent. Dealers sometimes quote the money factor specifically because a tiny decimal looks less alarming than the percentage it represents, so it's worth running this conversion yourself before signing.
Residual value is the leasing company's estimate of what the vehicle will be worth at the end of the lease, expressed as a percentage of the original price. It's set up front and locked in for the life of the lease — a higher residual percentage means less of the car's value gets paid off during your lease term, which directly lowers the depreciation fee and your monthly payment.
It depends heavily on how long you keep the car and how many miles you drive. Buying with a loan usually costs more per month but builds equity you keep at the end and has no mileage limits; leasing typically has a lower monthly payment but you own nothing when the term ends, and you're on the hook for wear-and-tear or mileage charges. Run the purchase side of the comparison with the Car Loan Calculator to compare total costs directly.
This tool models the two core components of a lease payment — the depreciation fee and the finance fee (rent charge) — but doesn't include the acquisition fee (charged at signing, commonly a few hundred dollars), the disposition fee (charged at lease-end if you don't buy the car), or mileage overage charges if you exceed your contracted annual mileage allowance. These all vary by lessor, so budget for them on top of the base payment shown above.
Worked example: a $35,000 vehicle with a $2,000 down payment, 55% residual value, a 0.00125 money factor, and a 36-month term. Adjusted cap cost = 35,000 − 2,000 = $33,000. Residual value = 35,000 × 0.55 = $19,250. Depreciation fee = (33,000 − 19,250) ÷ 36 = $381.94/month. Finance fee = (33,000 + 19,250) × 0.00125 = $65.31/month. Base monthly payment = 381.94 + 65.31 = $447.26. At a 6% sales tax rate, the monthly payment with tax = 447.26 × 1.06 ≈ $474.09.