Auto Lease Calculator Payment Tool
Auto Lease Calculator
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Lease Details
To convert APR to money factor: APR ÷ 2400
Estimated value at end of lease
An auto lease is essentially renting a car for a fixed period, typically 2-4 years, with monthly payments based on the vehicle's depreciation during that period rather than its full price. Leasing often means lower monthly payments than buying, but you build no equity and face mileage limits. This calculator breaks down exactly what your lease will cost.
How Lease Payments Are Calculated
Your lease payment has two components: a depreciation charge and a finance charge. The depreciation charge covers the difference between the vehicle's selling price and its residual value (what the car is worth at lease end). The finance charge is similar to interest and is based on the money factor (which you convert to an APR by multiplying by 2,400).
Monthly Depreciation = (Cap Cost - Residual Value) / Lease Term Monthly Finance Charge = (Cap Cost + Residual Value) × Money Factor Monthly Payment = Depreciation + Finance Charge + Taxes/Fees
Cap Cost = vehicle price after any cap cost reductions (down payment, trade-in, incentives).
Leasing vs Buying Comparison
Leasing wins on monthly payment and always driving a newer car with warranty coverage. Buying wins on long-term cost (you own the asset), no mileage restrictions, and freedom to modify the vehicle. The financial decision depends heavily on how long you keep cars. If you keep vehicles 7+ years, buying usually wins. If you trade every 2-3 years anyway, leasing can be comparable.
| Factor | Leasing | Buying |
|---|---|---|
| Monthly payment | Lower | Higher |
| Equity built | None | Yes |
| Mileage limits | Yes (10-15k/yr typical) | No |
| Long-term cost | Higher (ongoing payments) | Lower if kept long |
| Best for | Drivers who trade every 2-3 yr | Drivers who keep cars 5+ yr |
Frequently Asked Questions
What happens if I go over my lease mileage?⌄
Excess mileage fees typically run $0.10-$0.30 per mile at the end of the lease. On a 36-month lease with a 10,000 mile/year limit, going 5,000 miles over at $0.25/mile costs $1,250. If you know you drive more than the allowed mileage, negotiate a higher mileage allowance upfront or consider buying instead.
What is money factor in a lease?⌄
Money factor is the leasing equivalent of an interest rate, expressed as a small decimal (like 0.00125). Multiply by 2,400 to convert to an approximate APR (0.00125 × 2,400 = 3%). Dealers may not volunteer this number, but you can ask for it and compare it to current market rates to ensure you are not overpaying on the financing portion.
Can I buy my leased car at the end of the lease?⌄
Yes. Most leases include a purchase option at the predetermined residual value. If the car is worth more than the residual (which sometimes happens with vehicles that held their value well), buying out the lease can be a good deal. If it is worth less, just return it.
Do I need gap insurance on a leased car?⌄
Many lease agreements include gap coverage as part of the lease terms. If not, gap insurance covers the difference between what you owe on the lease and what insurance pays if the car is totaled. This is particularly important early in the lease when depreciation is steepest. Check your lease contract before purchasing separate gap insurance.