Car Lease Calculator
Calculate your monthly lease payment and total lease cost. Understand the true cost of leasing a vehicle with our comprehensive lease calculator.
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6.7% of vehicle price
Estimated value: $16,500
APR: 4.8% - Good rate
Lease Summary
Lease Payment Results
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Understanding Car Leasing
Car leasing is a popular alternative to buying, offering lower monthly payments and the ability to drive a new vehicle every few years. Our lease calculator helps you understand the true cost of leasing and compare it with buying options.
Key Lease Terms:
- Capitalized Cost: The negotiated price of the vehicle
- Down Payment: Initial payment to reduce the capitalized cost
- Residual Value: Estimated value of the car at lease end
- Money Factor: The interest rate for the lease (similar to APR)
- Lease Term: Length of the lease agreement (typically 24-48 months)
- Mileage Allowance: Annual miles included in the lease
How Lease Payments Are Calculated:
Monthly lease payment = Depreciation + Finance Charge + Taxes
- Depreciation: (Capitalized Cost - Residual Value) ÷ Lease Term
- Finance Charge: (Capitalized Cost + Residual Value) × Money Factor
- Taxes: (Depreciation + Finance Charge) × Tax Rate
Pros and Cons of Leasing:
Advantages:
- Lower monthly payments than buying
- Drive a new car every few years
- Warranty coverage throughout lease
- No trade-in hassles
- Predictable costs
Disadvantages:
- No equity building
- Mileage restrictions
- Wear and tear charges
- Early termination fees
- Always have a car payment
Tips for Better Lease Deals:
- Negotiate the capitalized cost (not just the monthly payment)
- Research residual values for your desired vehicle
- Compare money factors from different lenders
- Consider multiple security deposits to lower the money factor
- Be realistic about your mileage needs
- Read the lease agreement carefully before signing
When Leasing Makes Sense:
Leasing is ideal if you prefer driving new vehicles, want lower monthly payments, don't drive many miles, and don't mind always having a car payment. It's also good for business use due to potential tax benefits.
Frequently Asked Questions About Car Leasing
How do I calculate monthly lease payments?
Monthly lease payments include depreciation, finance charges, and taxes. The formula is: (Capitalized Cost - Residual Value) ÷ Lease Term + Finance Charge + Taxes. Our calculator automatically computes this for you based on your specific lease terms.
What is a money factor in car leasing?
The money factor is the lease equivalent of an interest rate, expressed as a decimal. To convert to APR, multiply by 2,400. For example, a money factor of 0.00125 equals 3% APR. Lower money factors mean lower monthly payments. Our calculator uses money factor for accurate calculations.
How much should I put down on a car lease?
Lease down payments are typically $0-$3,000. While larger down payments reduce monthly payments, you lose that money if the car is totaled or stolen. Consider putting down only what's required and keeping extra cash for emergencies. Our calculator shows how down payments affect monthly costs.
What is residual value and how does it affect leasing?
Residual value is the estimated worth of the car at lease end. Higher residual values mean lower monthly payments because you're paying for less depreciation. Luxury cars and popular models typically have better residual values. Our calculator considers residual value in payment calculations.
What happens if I exceed my lease mileage limit?
Exceeding mileage limits results in per-mile charges, typically $0.15-$0.25 per mile. These charges can add hundreds or thousands to your end-of-lease costs. Be realistic about your driving needs when negotiating the lease. Our calculator helps you estimate total lease costs.
Can I negotiate a car lease like buying?
Yes, you can negotiate the capitalized cost (vehicle price), money factor, and residual value. Focus on the total cost, not just the monthly payment. Research fair market values and compare offers from multiple dealers. Our calculator helps you understand the true cost of different lease terms.
What are the costs at the end of a car lease?
End-of-lease costs may include: excess mileage charges, wear and tear fees, disposition fees ($300-$500), and any remaining payments if you terminate early. Some leases offer wear and tear forgiveness programs. Our calculator includes these potential costs in total lease calculations.
Is leasing better than buying for tax purposes?
For business use, leasing may offer tax advantages as you can deduct lease payments and related expenses. For personal use, there are typically no tax benefits. Consult a tax professional for your specific situation. Our calculator focuses on the financial costs of leasing.