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How to Calculate Monthly Lease Payments
In this example, we use a vehicle with a cap cost of $24,000 leased for 36 months, with 72% residual value and a money factor of .0038.
Step 1: Capitalized Cost
The cap cost is the selling price you've negotiated for the vehicle, minus any downpayment. (example: price is 24,000 - 3,000 downpayment = 21,000 cap cost)
Step 2: Calculate Your Vehicle's Residual Value
To calculate your vehicle's residual value, multiply its full MSRP times its residual value percentage. The residual value percentage is determined by the bank that you are leasing through. (example: MSRP = 25,000 x 72% residual = 18,000 residual value).
(note that some banks will only allow consumers to residualize certain options or will place a cap on the amount of money that can be residualized for each option)
Step 3: Determine Your Vehicle's Total Depreciation
To determine your vehicle's depreciation, subtract its residual value from your capitalized cost. (example: $24,000 - $18,000 = $6,000 depreciation).
Step 4: Determine Your Vehicle's Monthly Depreciation
To figure out your car or truck's monthly depreciation, divide the total depreciation that you just calculated by the number of months that you are going to lease it for. (example: $6,000 / 36 = $166.67 monthly depreciation)
Step 5: Determine Interest Charges
To determine the interest portion of your monthly lease payment add your vehicle's capitalized cost and its residual value and then multiply the result times your bank's lease money factor. (example: $24,000 + $18,000 = $42,000 x .0038 = $159.60)
Step 6: Calculate Pre-Tax Monthly Payment
Finally, add the results from Step 4, the monthly depreciation, and Step 5, the monthly interest charge, to come up with your pre-tax monthly lease payment. (example: $166.67 + $159.60 = $326.27)
If you would like help, we'll need the following info about the vehicle you plan to lease:
Capitalized cost (negotiated price minus any downpayment)
Residual value percentage
Bank/Finance company's money factor
Lease term, in months
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