Auto Lease Calculator

How to Calculate Auto Lease Payments With This Calculator

To get an accurate estimate of your monthly lease payment, you'll need to gather specific information about the vehicle and lease terms you're considering:

• Car price: Enter the manufacturer's suggested retail price (MSRP) of the vehicle you want to lease. This is the starting point for calculating your lease payment, though you may be able to negotiate a lower capitalized cost with the dealer.
• Down payment: Input any upfront payment you plan to make. While many leases require little to no down payment, putting money down can reduce your monthly payment amount.
• Lease term: Select how long you want to lease the vehicle. Options include 24 months, 36 months, 48 months and 60 months.
• Residual value: This represents the estimated percentage of the vehicle's original value at the end of your lease term. Most vehicles retain between 50% and 60% of their original MSRP at lease end. A higher residual value typically results in a lower monthly payment because you're paying for less depreciation.
• Sales tax: Enter your state and local sales tax rate as a percentage. This tax is typically applied to your monthly lease payment.
• Credit score: Select your credit score range. If you don't know your score, register with Experian to get free access to your FICO^® Score^Θ.

Once you enter all of the necessary information, you'll be able to view an estimated monthly payment, with the sales tax and interest broken out for full context.

Factors That Affect Your Lease Payment

There are several factors that influence what you'll pay for a car lease. Understanding them can help you potentially save on your monthly payments:

• Vehicle price: Negotiating a lower selling price directly reduces your monthly payment.
• Depreciation: You pay for the vehicle's expected loss in value during your lease term. Vehicles that hold their value well have higher residual values, which means lower depreciation costs and smaller monthly payments.
• Money factor: This is the lease equivalent of an interest rate. The leasing company sets the money factor based on your credit score, the vehicle's residual value and more.
• Lease term length: Longer lease terms spread depreciation over more months, potentially lowering your monthly payment. However, you may pay more in total interest charges over time.
• Mileage allowance: Most leases include annual mileage limits, typically between 10,000 and 15,000 miles per year. Higher mileage allowances increase your monthly payment because the vehicle will experience more wear and depreciate faster.
• Fees and taxes: Acquisition fees, disposition fees, registration costs and sales taxes all factor into your total lease cost. These vary by state and leasing company.

Lease payments are considerably cheaper than auto loan payments, and that gap has widened over the past few years. Take a look at the average monthly payments for each option:

Average New Vehicle Monthly Payment

Leasing vs. Financing

Leasing and financing are the two most common ways to get into a new car, and each option works differently. Leasing generally offers lower monthly payments and more flexibility, while financing gives you a path to full ownership.

The right choice depends on your budget, driving habits and how long you plan to keep the vehicle. That said, there are both benefits and drawbacks to consider with each one. Here's what to keep in mind:

Learn more about financing versus leasing to determine which option is best suited for your situation and priorities.

Tips to Save Money When Leasing a Car

If you're planning on leasing a car instead of buying, it's important to plan ahead so you can secure the best possible deal. Here are some tips that can help:

• Research before you visit the dealership. Compare lease offers from multiple dealers and familiarize yourself with current market rates for the vehicle you want. Understanding key terms like capitalized cost, residual value and money factor can give you some negotiating power.
• Negotiate the vehicle price. Don't assume the sticker price is fixed. The capitalized cost is negotiable just like a purchase price. Use resources like Kelley Blue Book to determine fair market value and negotiate from the dealer's invoice price rather than MSRP.
• Take advantage of manufacturer incentives. Automakers often offer lease specials with reduced money factors, cash rebates or discounted payments. Ask dealers about current incentives and factor them into your negotiation.
• Choose the right mileage allowance. Select a mileage limit that matches your driving habits, but don't be too conservative with your estimate. Excess mileage fees typically range from $0.15 to $0.25 per mile. It's more cost-effective to negotiate a higher mileage allowance upfront than to pay overage fees later.
• Consider your credit score. Borrowers with higher credit scores qualify for better money factors and lower payments. Check your credit score to see where you stand, and if it's close to the next tier, taking steps to improve your credit before leasing could save you money over the lease term.
• Avoid unnecessary add-ons. Dealers may offer additional products or services during negotiations, but you should only agree to add-ons you genuinely need, as these increase your monthly payment and total lease cost.
• Inspect the vehicle carefully. Before signing, document any existing damage to avoid charges when you return the vehicle at lease end. Most leases allow for normal wear and tear, but you're responsible for damage beyond that standard.

Learn more: The Do's and Don'ts of Leasing a Car

Make an Informed Leasing Decision

Understanding how lease payments are calculated can make the whole process feel a lot less intimidating. Use the auto lease payment calculator to play around with different scenarios and get a sense of what your monthly cost might look like before you head to the dealership.

When you know what affects your payment—and where there's room to negotiate—you're in a much better position to land a lease that actually fits your budget.

While auto leases may not require a specific credit score, it still helps to check your credit score ahead of time. Your credit plays a big role in the terms you'll qualify for, and you can check your credit report and FICO^® Score for free before you start shopping.