Auto Lease Calculator

This auto lease calculator estimates the monthly payment on a car lease, and shows what the same car would cost if you bought it instead. Enter the price, the lease term, the interest rate or money factor, your down payment, any trade-in, the sales tax, and the residual value, and it breaks the payment into depreciation, interest, and tax. For a general, non-car lease, use the Lease Calculator.

What a car lease is

A lease is a contract that lets you use someone else's property for a set time in exchange for regular payments. A car lease works the same way: you put some money down, make a monthly payment, and drive the car for a fixed period, usually two to four years, then hand it back. It helps to picture a lease as a long-term rental. A rental lasts hours or days; a lease lasts years. Many leases include a purchase option that lets you buy the car at a set price when the term ends, though adding that option usually nudges the monthly payment up a little. Most leases come from dealerships, with the contract itself written by a finance company.

The numbers that set your payment

A few figures drive the monthly lease:

• Auto price (capitalized cost): the agreed price of the car. You can negotiate it down just as you would when buying, and a lower cap cost means a lower payment. A common tip is to settle the price as if you were buying outright, and only mention leasing once the number is agreed.
• Money factor: the lease version of an interest rate, tied to your credit. Weaker credit means a higher money factor and a pricier lease. To convert, divide the APR by 2,400, so 6% APR is a 0.0025 money factor; multiply a money factor by 2,400 to read it as an APR. This calculator accepts either.
• Lease term: how long the lease runs, usually 24 to 48 months.
• Residual value: the car's estimated worth at the end of the lease, set by the finance company. The gap between the cap cost and the residual is the depreciation you pay for, spread across the term. A car that holds its value well has a higher residual, less depreciation, and a lower lease payment.

Mileage limits

Almost every lease caps the miles you can drive, commonly 10,000 to 15,000 a year, with 12,000 the usual figure. Go over and you pay a per-mile penalty at the end, typically 5 to 20 cents a mile. High-mileage leases add several thousand miles a year for a higher monthly payment, which can suit heavy drivers, since the average U.S. driver covers roughly 13,000 to 14,000 miles a year. If you blow past the cap, buying the car at lease-end is one way to sidestep the mileage charges.

Wear and tear

You are expected to return the car in reasonable shape. At turn-in an inspector, often a third party, checks it against the mileage. Damage you caused, such as collision repairs, comes out of your pocket. Ordinary wear splits into two buckets:

• Normal wear is not charged to you. Definitions vary by lessor but tend to follow a pattern: small dings and scratches under about half an inch that buff out, minor interior marks, light scuffs on wheel covers, and routine replacement of tires, brakes, and bulbs to the maker's spec.
• Excessive wear is charged to you. Broken or missing parts, bent or cracked rims, non-working mechanical or electrical components, and body punctures larger than a couple of inches usually count. If repairing excessive damage would cost more than replacing the car, you can be liable for the cheaper of the two.

You can limit charges by looking after the car: door-edge guards, keeping children's messes in check, and a good clean-up before return, buffing scratches, swapping small broken parts, and removing stains. Wear-and-tear insurance exists for those who want the cover, and buying the car at lease-end avoids the charges entirely.

Maintenance

Most leases require you to keep the car serviced on schedule and to prove it. Skipping maintenance can trigger penalties or void the warranty. The work is usually routine, oil changes, tires, brakes, and topping up fluids, and much of it may fall under the manufacturer's warranty during the lease. Read the contract, because maintenance terms vary widely from one lease to another.

Why people lease, and the trade-offs

Leasing appeals for a few reasons:

• A lower down payment and monthly payment than buying the same car, so a newer car is within reach.
• In the U.S., a leased car used for business can often be written off, since the IRS treats a lease as an operating expense, which helps the self-employed and small businesses.
• Less maintenance worry, because a leased car is usually new and under warranty for the term, then handed back before big repairs arrive.
• A low-commitment way to try a car for a few years before deciding whether to buy it at the end.

The downsides are real too. You build no equity, the way renting a home builds none, so when the lease ends you have nothing to show for the payments. You never own the car during the lease, which restricts modifications. And the mileage cap makes a lease a poor fit for long road trips or a heavy commute.

Getting out of a lease early

Plans change, and there are a few ways to exit a lease before the term ends:

• Return the car: the simplest route, but expect an early-termination fee plus the remaining depreciation.
• Transfer the lease: a lease swap legally hands the car and its remaining payments to a new lessee on the same terms. There is usually an administration fee of a few hundred dollars, and specialist swap sites help match people and spell out the costs. Confirm your contract and state allow it.
• Buy the car out: many leases let you buy the car early at a set price, which ends the lease and makes you the owner, free to keep, sell, or trade it. This makes sense mainly when the buyout is at or below the car's resale value.
• Talk to the finance company: if money is tight, ask about a short payment break; some will pause payments and add the difference back later.

How the monthly payment is calculated

The payment has three parts: depreciation, interest, and tax. Take a car with an agreed price of $50,000, a 36-month lease, a residual of $25,000, a 6% APR, an $8,000 down payment, and a $5,000 trade-in, in a state with 6% sales tax.

First, find the net capitalized cost by subtracting the down payment and trade-in from the price: $50,000 − $8,000 − $5,000 = $37,000. Subtract the residual to get the depreciation, then divide by the term for the monthly depreciation: ($37,000 − $25,000) ÷ 36 = $333.33.

Convert the APR to a money factor and multiply it by the sum of the net cap cost and the residual for the monthly interest: money factor = 6% ÷ 2,400 = 0.0025; ($37,000 + $25,000) × 0.0025 = $155.00.

Add depreciation and interest, then apply the tax rate for the monthly tax: ($333.33 + $155.00) × 6% = $29.30. Add the three together for the monthly lease payment: $333.33 + $155.00 + $29.30 = $517.63.

The calculator also shows the same car bought under equal terms, where the upfront and monthly costs are usually higher. Documentation, title, and registration fees are the same either way and are left out, while acquisition, security deposit, and disposition fees are lease-specific, so a real lease can cost a little more than the estimate. Compare the numbers with our Auto Loan Calculator before deciding, and the Depreciation Calculator shows how fast a car loses value.