Calculate Your Own Car Lease Payment

The average cost of a car lease in the second quarter of 2019 was $458, according to Experian's State of the Automotive Finance Market report. The figure is illustrative of increasing vehicle prices and car loan-level payments. But how does one translate this average into a monthly payment that applies to your next leased car?

For some shoppers, leasing is as dark and mysterious as the deepest reaches of outer space. It's full of confusing language, weird fees and payments that seem impossible to figure out at home without an advanced degree in mathematics. The truth is you don't have to be an astrophysicist to calculate your out-of-pocket costs. Figuring out your own monthly payment from home can be easy. All you need is a calculator, some deal info, and a little guidance.

But first, some advice. While you can certainly calculate your own lease, there are easier ways to estimate what your monthly payment could be.

Your first stop should be our Incentives and Rebates page. Here you can find carmakers' lease specials with very attractive monthly payments. We also suggest checking automaker and dealership websites to see lease offers, which tend to change monthly.

Another valuable resource is the Edmunds Car Lease Calculator. You will need some information to get an accurate quote, but our calculator will do the math for you. It also pulls in purchase price information about current models and local tax rates.

Perhaps the easiest way to get an idea of what a lease should cost is to obtain real-world lease quotes from multiple dealerships. With three to five quotes in hand, you can quickly get a feel for a good deal.

If after checking out all these other options you are still determined to calculate your own lease payment, we're happy to help.

And because we know that people process information differently, we will present the formula to you in two different ways.

What to Expect: A Very Close, but Not Exact, Lease Payment

Calculating your own lease payment to the penny is unrealistic: Taxes and fees will vary by region, and add-on fees can vary from brand to brand. And no matter how hard you try, you're almost guaranteed to leave some fees out of the equation. But you can get pretty close.

Some of that data you need will be available here on Edmunds. But other information you'll need to collect from a dealership. A simple email to a fleet manager or sales manager should be all it takes to get started.

What You'll Need

1. MSRP (aka the sticker price) of the vehicle. You can find the MSRP for virtually any new car here on Edmunds. Be sure you're getting the MSRP for the exact package of the car you intend to lease.

2. The money factor. This is the "interest rate" you'll pay during your lease. It's sometimes called a lease factor or even a lease fee. To get the money factor, call or email a dealership that sells that brand and be specific about the model you're considering: Money factors may not be the same for all models. Money factors look different from their annual percentage rate (APR) cousins — usually something like this: 0.00125. Here's a handy tip: To convert interest rates to money factors, divide the interest rate by 2,400. To convert money factors to interest rates, multiply by 2,400. So 0.00125 x 2,400 would equal an interest rate of 3%.

3. Lease term. We recommend leasing for 36 months or less. However, some lease specials are for 39 months or 42 months. These terms shouldn't be deal-breakers. Just know that you will end up paying an additional year of registration fees if you opt for a lease that is longer than 36 months. Also, be sure to check the vehicle warranty. Many "bumper-to-bumper" warranties end at the 36-month mark.

4. Residual value of the car. Ask the dealer for the residual percentage of the car you're considering. The dealership will likely ask how many months you plan to lease and how many miles you plan to drive per year. These factors affect the residual percentage. As a rough guide, most cars have a residual value of between 45% and 60% for a 36-month lease. Again, be certain the residual amount you request is for the exact package of the car you'll be leasing.

5. Fees. These are registration, acquisition, down-payment tax (if any), documentation fees, and the like. If you're unable to get an exact figure for the fees you'll have to pay, ask the dealer for a rough estimate.

6. Rebates. Without factoring in applicable rebates, your calculations will be off. If you're not sure what rebates are available, don't forget to check our Incentives and Rebates page.

Walk Through a Sample Lease

To best explain the calculation steps, we are going to create a sample lease.

For our example, we are going to lease a car with an MSRP of $23,000. This car will have a residual value of 57% and a money factor of 0.00125. We will have a $1,700 down payment, and the car will have a $500 rebate. Assume we've negotiated a sales price of $21,000 (before the rebate is applied) and will have $1,200 in various fees. For this example, we will not have a trade-in.

If you just want the formula, skip to the bottom of this article. If you'd prefer more context, read on.

Step 1. Take the vehicle's MSRP and multiply it by its residual percentage to get the residual value.

Step 2. Take your negotiated sales price and add in all the fees you'll have to pay. For our example, we've negotiated a sales price of $21,000 and have $1,200 in fees. Add those together and we get what's called the gross capitalized cost.

Step 3. Take the total amount of the down payment, trade-in equity or rebates and add them together. In this example, we have $1,700 cash and a $500 rebate. So our total down payment is $2,200. This is called the capitalized cost reduction.

Step 4. Subtract the capitalized cost reduction of $2,200 from our gross capitalized cost of $22,200. The amount we are left with is called the adjusted capitalized cost.

Step 5. Subtract the residual from the adjusted capitalized cost. This is your depreciation amount, which is the basis of your lease payment.

Step 6. Divide the depreciation amount from Step 5 by the months of the lease. In our example, we are using 36 months. The result is our base payment. Don't get excited by this small number just yet. We still need to add interest and taxes.

Step 7. Take the adjusted capitalized cost and add it to the residual. Multiply that amount by the money factor. The resulting number will be the amount of interest charged per month. This is called the rent charge. Here is what that would look like, using our money factor of 0.00125.

Step 8. Add the rent charge to the payment you calculated in Step 6 to get your pretax lease payment.

If you're lucky enough to live in a state that doesn't charge sales tax, you're done! If you're like the rest of us, you'll still need to add tax. Luckily, that's easy to do. In Santa Monica, California, for example, our sales tax rate is 10.25%. So we have one more step before we're done.

Step 9. Multiply the payment by the local tax rate to get the total monthly payment.

Here is the formula again, without the commentary: