Purpose of the Car Lease Calculator

Car Lease Calculator helps estimate your monthly auto lease payments based on your input values. It can also be used to work backward from a monthly payment to a total vehicle price.

What is an Auto Lease?

An auto lease is a contractual agreement that lets someone use a vehicle for a fixed period in exchange for regular payments. Unlike traditional car buying, leasing involves lower monthly payments and little or no equity at the end of the term.

You may have the option to purchase the vehicle at the end of the lease through a purchase option agreement.

Key Lease Terms

• Auto Price (Capitalized Cost): The starting price of the car, which can often be negotiated just like when buying.

• Money Factor: The interest rate used in leases, typically derived from your credit score. Convert APR to money factor by dividing by 2400.

• Lease Term: The number of months in the lease agreement, usually 24–48 months.

• Residual Value: The estimated value of the car at the end of the lease. Higher residual values result in lower monthly payments.

Mileage Limits

Standard leases allow for 10,000 to 15,000 miles per year. Exceeding the limit incurs fees (5–20 cents per mile). High mileage leases are available at a higher cost.

Wear and Tear

• Normal Wear and Tear: Minor cosmetic damages and routine part replacements, usually covered by the lessor.

• Excessive Wear and Tear: Significant damages or broken components that reduce the car’s value. Lessees may be charged or required to repair before return.

Tips: Protect the car’s interior and exterior, clean and repair it before returning, and consider wear and tear insurance.

Maintenance Requirements

Leased cars must be maintained per the manufacturer’s guidelines. Routine services like oil changes and tire rotations are usually required and must be documented.

Why Lease a Vehicle?

• Lower upfront and monthly costs

• Tax write-offs for businesses

• Less hassle with long-term maintenance

• Opportunity to drive a new car every few years

Considerations:

• No ownership equity

• Mileage restrictions

• Limited modification options

Options to End a Lease Early

1. Return the Car – May involve termination fees.

2. Lease Transfer – Hand over lease to someone else (with potential fees).

3. Early Buyout – Pay the remaining balance to own the car.

4. Negotiate with Lessor – Request payment relief in financial hardship.

Example Calculation

• Auto Price: $50,000

• Down Payment: $8,000

• Trade-in Value: $5,000

• Residual Value: $25,000

• APR: 6%

• Lease Term: 36 months

• Sales Tax: 6%

1. Capitalized Cost: $50,000 – $8,000 – $5,000 = $37,000

2. Depreciation: $37,000 – $25,000 = $12,000 / 36 = $333.33 per month

3. Money Factor: 0.06 / 24 = 0.0025

4. Monthly Interest: ($37,000 + $25,000) × 0.0025 = $155.00

5. Monthly Tax: ($155 + $333.33) × 0.06 = $29.30

6. Monthly Lease Payment: $333.33 + $155.00 + $29.30 = $517.63