TOOLDecode the lease before you sign
Lease quotes hide the math behind a single monthly number. This calculator breaks it into the two pieces you're really paying for — depreciation (the value the car loses while you drive it) and the rent charge (the interest) — so you can see exactly where your money goes and spot a bad deal.
How a lease payment is built
Two fees, plus tax:
Rent charge = (net cap cost + residual value) × money factor
Monthly = (depreciation + rent charge) × (1 + tax rate)
The net cap cost is your negotiated price minus any down payment. The residual value is a percentage of MSRP. The money factor is the lease's interest rate — enter an APR and the tool shows the equivalent money factor (APR ÷ 2400).
What actually lowers a lease payment
- Negotiate the cap cost. The selling price is negotiable just like a purchase — a lower price directly cuts depreciation.
- Pick a car with a high residual. Slow-depreciating models cost less to lease.
- Watch the money factor. Convert it to APR (× 2400) to sanity-check the rate.
Deciding between leasing and buying? Compare with the car loan calculator, and check your kilometre limits with the lease mileage calculator so overage fees don't surprise you.
Estimates are for planning only. Real lease contracts include acquisition, disposition and documentation fees, taxes that vary by region, and payment-timing rules this simplified model omits. Confirm all figures with the dealer.
Frequently asked questions
How is a car lease payment calculated?
A lease payment has two parts. The depreciation fee is (net capitalized cost − residual value) ÷ the term in months. The rent charge is (net cap cost + residual value) × the money factor. Add them together, then apply sales tax to get the monthly payment.
What is a money factor and how does it relate to APR?
The money factor is how lease interest is expressed. Multiply it by 2400 to get the approximate APR — so a money factor of 0.00125 is about 3% APR. This calculator lets you enter APR and shows the equivalent money factor.
What is residual value?
The residual value is what the leasing company predicts the car will be worth at the end of the lease, usually a percentage of MSRP. A higher residual means the car depreciates less during your lease, which lowers your monthly payment.