Car Lease Calculator
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Use this car lease calculator to estimate your monthly car payment. Input the car’s price, down payment, resale value at the end of the lease, sales tax and lease terms. Based on these figures, the calculator will estimate what your total monthly lease payment, interest rate and sales tax will be.
How to calculate your car lease payment
These are important terms you’ll need to know to calculate your monthly car lease payment. Some of these figures are negotiable while others are set by the lender.
Car price: In leasing, this is called the capitalized cost or cap cost and is the price of a car after negotiation. Cap cost is used to calculate how much a car will depreciate and how much the lease payments will be.
Down payment: This is the amount you pay upfront to lower the cost of your lease and is often referred to as capitalized cost reduction or cap cost reduction. Although putting a larger sum down can lower your monthly lease payment, it won’t make much of a difference in lowering your interest rate or the overall cost of leasing the car. This is because, unlike a down payment for a car purchase, a cap cost reduction won’t go toward building equity in the vehicle. Additionally, most leases come with gap insurance, which lessens the chances of having to pay any uncovered balance if the car is totaled or stolen. If you make a large down payment, you won’t get that money back if your car is stolen or totaled. Keep in mind that if you have strong credit, you can typically start a lease with $0 down and still have lower payments than if you financed a car.
Resale value: This is also called the “residual value.” It's what the car is worth at the end of the lease and is set by the lender, so you can’t negotiate it. However, it’s smart to lease a car with good resale value. Here’s why: If a car is worth $30,000 new, and its residual value after three years is $15,000 (or 50%) you have essentially used $15,000 of its value. But if that same car is worth $18,000 (60%) after three years, you have used only $12,000 of its value. You pay only for the value you use, meaning you’re on the hook for less when the resale value is higher.
Eventually, you'll get the specific residual value from the dealer. But for now, you can use a resale value between 50% and 60%, when calculating your monthly payment.
Sales tax: The sales tax on a leased car will vary depending on where you live. Some states require you to pay sales tax only on the amount of the car’s value you’re leasing while others, like Texas, require you to pay sales tax on the total purchase price.
Interest rate: In a lease calculation, the interest rate is called the “lease factor” or “money factor.” Money factors are displayed differently from interest rates. For example, a 3% interest rate would be written as a money factor of 0.00125. (You can convert an interest rate to a money factor by dividing it by 2,400: 3/2,400 = 0.00125. Conversely, you can convert a lease factor to an interest rate by multiplying it by 2,400.)
The money factor you get will vary based on your credit score, lease term, residual value and lender. Leasing rates can range anywhere from 2% to 16%.
Length of the lease: Car leases usually last 36 months for a standard lease, which is also how long most warranties last. This means you don’t have to pay extra for extended coverage, and your cost of maintenance will be low since the car is new. If you lease a car for more than the standard three years, you could be on the hook for more service costs, buying new tires and other costly repairs due to wear and tear.
Other factors that affect what you'll pay each month
There are other factors that can impact your monthly car lease payment, some of which you choose and others that the leasing company sets. They include the following;
Security deposit: Most leasing contracts require a security deposit, which is typically equal to one monthly payment. Security deposits are used to offset anything you might owe at the end of your lease and, unlike down payments, are refundable.
Drive-off fees: This is the amount due when you sign your lease and typically includes several fees like your down payment, first lease payment, registration fees and security deposit.
Cash rebates and incentives: When a car isn’t selling quickly enough, the manufacturer may offer rebates and incentives, which can reduce the monthly payment of a lease. Often, these are called “lease specials” and can greatly reduce your payment. Websites like CarFax track lease offers for car shoppers.
Included miles: Many lease contracts allow 12,000 miles a year. However, you can find leases with mileage as low as 5,000 miles; because these ultra-low-mileage leases provide less value, they should result in a lower monthly payment. Similarly, high-mileage leases will cost more, but they can be a good option if you drive a lot and want to avoid potential excess-mileage charges. Always check to see how many miles are included with the lease.
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How to use the car lease calculator's results
Estimating your monthly payment with a lease calculator gives you a benchmark to use as you request lease quotes from dealers.
Don’t expect to calculate your lease payment to the dollar; it’s just an estimate. But if you base your calculation on good information, you can get close to the right amount. Then, if a dealer offers you an even better deal, you can jump on it.
Remember, when you compare quotes, make sure the monthly payment is based on the same number of months, down payment, included miles and interest rate. When these figures change, the monthly payment will, too.
As you gather quotes, use the lease calculator to double-check the dealer's figures. Ask your salesperson for a breakdown of all the numbers, especially the interest rate and residual value, that the quote is based on.
In some cases, you might be pleasantly surprised to get quotes from dealers that are well below the number estimated using the calculator. This could be due to a discounted sale price by the dealer, special financing from the manufacturer or a stronger residual value than you estimated.
