Auto Lease Calculator

How to Understand Your Auto Lease Payment

Leasing a car in the US can feel complicated, but the payment boils down to two main parts: depreciation and finance charges. This calculator helps you see exactly what you're paying for.

Key Lease Terms Explained

• MSRP: Manufacturer's Suggested Retail Price. The official sticker price. The residual value is almost always calculated from this number.
• Negotiated Price (Gross Cap Cost): This is the most important number you can negotiate. It's the actual price of the car you're agreeing to, just like when buying. A lower negotiated price directly lowers your monthly payment.
• Residual Value: The car's estimated value at the end of the lease, set by the lender. You can't negotiate this, but a higher residual value means lower depreciation, and therefore a lower payment.
• Money Factor: This is the "interest rate" on a lease, expressed as a small decimal (e.g., 0.00250). To convert it to an APR, multiply by 2400. (0.00250 * 2400 = 6% APR).
• Capitalized Cost (Cap Cost): The "Net Cap Cost" is the amount you are financing. It's the `Negotiated Price` minus your `Down Payment`, `Trade-in`, and any `Rebates`.

Lease vs. Buy: Which is Better?

Leasing is great if you want a new car every 2-4 years, prefer lower monthly payments, and don't drive over the mileage limit (usually 10,000-15,000 miles per year). You are essentially just paying for the car's depreciation.

Buying (with a loan) is generally better if you plan to keep your car for many years, drive a lot, and want to build equity. Once your loan is paid off, the car is 100% yours. Use our Auto Loan Calculator to compare.