Estimate your monthly lease payment through the auto lease calculator, enter sales tax, down payment, residual value, car value at the end of the lease, and the car’s MSRP. The calculator will provide you with the estimated depreciation value, lease fee, residual value, monthly payment without taxes, and capitalized cost. Check your estimated cost through our auto lease payment calculator.

Looking to explore other financing options? Try our Auto Loan Calculator for car loans or check out the Auto Refinance Calculator to see how much you could save by refinancing your current lease.

What is Auto Lease?

An auto lease is an agreement allowing you to drive the auto for a fixed time in return for payment for the lease. The person who leases the car makes monthly payments as well as the down payment until the lease ends. These monthly payments are based on the time of lease of the car’s depreciation value. 

A car lease is just like a rental car, a rental car is just for a day or two day whereas a car lease is for two to three years. Some of the leases allow the person to purchase the leased auto once the lease ends, and you will pay a small amount added to the lease. You can get a lease through a private car dealer or dealership. 

Here are some variables that are important for the calculation of the monthly lease you must know before signing an agreement.

Capitalized Cost: Also known as cap cost. This price comes after the negotiation of the car. capitalized cost is mostly used to calculate the lease on a car or how much the car depreciates. Negotiate with car dealers before leasing a car, so you know the actual amount of the lease.

Money Factor: The Money factor is the interest rate specifically used in lease calculation. The money factor is used to showcase the interest rate that is charged on the monthly payment. Mostly, lessors used the money factor for the determination of lease rates concerning the credit history of each lease. For the calculation of the money factor, divide the APR on the lease by 2400; the answer comes in decimal or percent it depending on the given figure.

Lease term: Most lease tends to remain 2 to 5 years. Your monthly payment and mileage allowance will be affected by how long you lease the car.

Residual Value: Residual value is sometimes known as lease end value, and is also non-negotiable. This value is usually set by the lender and tells what the worth of the car is at the end of the lease. Some financial institutions set the residual value on the vehicles and do not change it. 

Sales Tax: Vehicle sales tax vary by region and state.Some states have sales tax, like Nevada, and some states have no tax, like Delaware. This sales tax is applicable on the lease, not on the total cost of your car. 

Total Monthly Payment: Your total monthly payments mostly depend on the following:

• Interest per month
• Tax per month
• Monthly depreciation rate

Pre-Tax Monthly Payment: You can calculate your pre-tax monthly payment by adding the monthly finance charges to the monthly depreciation. 

Total Due at Signing: This is the total amount that will be paid at the time of the lease contract. It usually ranges from $395 to $895, depending on your company and the car you have purchased. It includes the acquisition fee and the down payment fee, and is known as the bank administrative fee.

Mileage: Most leases are based on a mileage gap; it is important to know about maximum number of miles a car driven per year during the lease life. Because you will pay for every mile you have driven beyond the mileage limit. The average mileage limit ranges from 5000 to 12000; higher mileage limits are available, but they cost more. 

Wear and Tear: At the end of the lease time car will be returned in reasonable condition. When these vehicles are returned to the lender, they check these cars through a thorough inspection. Companies have already mentioned in the contract what damage is acceptable or not. Most damages are repaired by the person who leased the car. Lessees avoid any major damage and take good care of the car. If your car has excessive wear and tear, you can buy the car at the end of the lease to avoid penalties.

Maintenance: Most agreements mention a condition that autos require regular inspection and servicing. If you do not do this, then you will face penalties and warranties. Maintenance includes changing brakes, tires, oil, and topping up of fluid. Carefully read the rules of maintenance during the agreement and take care of the auto.

Why People Choose to Lease Instead of Buy?

Many reasons why people can choose to lease, and some of them are listed here:

• Leasing is less expensive than buying. People who cannot buy a car and want to enjoy driving can easily get an auto for a lower monthly payment and down payment.
• Maintenance costs of leased cars are low, and leased cars have a warranty from the manufacturer. So the owner does not worry about out-of-warranty repair costs.
• Leases are for 2 to 3 years, whereas an auto loan is for six years. You can easily exit a lease rather than a loan.

Getting out of a car lease early

Sometimes leasees want to get out of the auto lease, because of certain reasons such as enhanced lifestyle, family growth, wanting a more efficient and better auto. Because of uncertain financial situations, they also want to exit the lease. The leasees can exit the lease under some conditions, and these are listed here:

Returning the car to the lessor: Return the car to the lessor, and this simplest way of exit. But this will cost you a depreciation cost on the auto and an early termination fee.

Transfer the lease: There is another option transfer the lease from the old leasees to the new ones. This lease will continue and have the same terms as the old lease, same monthly payments for the remaining period. There are websites through which you can find buyers and sellers of leases, and this helps you in transferring the lease. A swap of lease is a legal process, and this will incur transferring costs.

Buyout the Leased Auto: In some situations, the lessee buys out the car before the lease time ends, and becomes the rightful owner of the car. 

Talk to Lessor: lessee faces trouble or is unable to pay the monthly lease, talk to the lessor to give him payment relief. Some lessors suspend the payments for a few months, but after that they will pay the monthly payment.

What to Expect When Calculating Your Lease Payment?

Sometimes it seems unrealistic to calculate the lease payment on your own. Fees and taxes vary by state, and add-on fees vary bank to bank. On our site, you get data to calculate your lease payment, and you get an accurate estimation of your lease. But in case of some other details, you will contact your dealer for guidance.

How to Calculate Auto Lease Payment?

Let’s look at an example to understand how monthly car lease payments are calculated through the auto lease calculator.

Imagine you’re leasing a car for 3 years. After some bargaining, the final price of the car (called the capitalized cost) is $42,000. The leasing company says the car will be worth $20,000 after those 3 years (this is called the residual value). They also offer an interest rate (APR) of 5%. You’re putting $6,000 as a down payment, and you’re also trading in your old car, which is worth $4,000. The sales tax in your state is 7%. Let’s say all fees are already included in the price of the car.

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Frequently Asked Questions