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How to Calculate Monthly Lease Payments

Kirstie_HKirstie_H Posts: 11,042
Calculating lease payments can be tricky, but we're here to help! You can try it yourself using the steps below, or provide info and we'll do it for you.

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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  • Am I missing something . Two dealers where around this price per month
    The other dealers where 40 dollars more per month on LEASE

    Am I missing something? here below is the quote from NJ dealer. I have read the lease buying guide and used the calculator

    2009 Infiniti Coupe AWD Journey with Premium and Navigation Packages
    MSRP: $44825.00
    Internet Selling Price $39661.00
    Total Savings $5164.00

    Money Factor .00191
    Cap cost reduction is 152.00
    Residual .51 60%
    Bank fee $595.00
    Sales tax for 19002 9% (PA)

    $1000 down
    39 months/10K
    $499.42 per month

    39 months/12K
    511.89 per month
  • Kirstie_HKirstie_H Posts: 11,042
    My calculations indicate that the two lower numbers you received didn't include the sales tax. You might call the lower-quoting dealers and check, but that's where I'm coming up with an extra ~$40 per month.


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  • Thank you
    kirstie h
  • Thanks for the help. Here is what the dealer provide me regarding Lease info on a 2009 G37 Coupe with Nav and Premium packages:
    MSRP 42,975
    Cap cost 39,946
    Residual % 57%
    39 months lease term
    Nothing down
    Dealer to pay off remaining lease payments of 2800.
    Dealer said payments would come to 659.50 plus tax of 07%. This sound high to me as the car is a year old. Still new though. Any help, thoughts or comments>>>>
  • Kirstie_HKirstie_H Posts: 11,042
    The calculation doesn't seem high, but the cap cost seems high - I don't see the money factor there, but in any case, it appears that people are getting better deals on the 2009 G37 than $40K.

    I really don't think this is your best deal. It sounds like you are currently leasing, and the lease is not yet over. How much longer do you have on that vehicle, and why get rid of it now?


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  • ppierce2ppierce2 Posts: 11
    Please help calculate my payments. I live in Illinois and sales tax is based off sales price.
    Honda Pilot EX-L
    nothing down, taxes rolled in.
    Due at signing 1st months, Doc Fee and License/Title

    MSRP 36,155
    Invoice 32814.31
    Cap Cost 30,854
    Residual 19,885.25
    money factor .00183
    Term 36 months
    12,000 miles
  • jayriderjayrider Posts: 3,602
    $396 based on the figures you posted. Taxes on 30854 [your rate] divide by 36 and roll into lease. In st. clair county in s.w. illinois that would add about $56 to the 396.
  • isellhondasisellhondas Issaquah WashingtonPosts: 19,907

    You are forgetting the Aquisition Fee that (I believe) all manufactures charge on leases. Honda charges 595.00 and that is probably typical.
  • Kirstie_HKirstie_H Posts: 11,042
    You're right - however, I've seen higher & lower amounts, depending on manufacturer and the deal-of-the-day. I'll try to remember to ask for follow-up if the person requesting assistance leaves out the acquisition fee!


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  • I was running my lease calculator on the deal Hyundai has on their new 2011 Sonata GLS. Are my calculations correct?

    Here are my numbers:

    MSRP: 20,195
    Down: 2,200
    Payment: 199 (w/o tax)
    Term: 36 mo
    ALG Residual: 54% after 36 mo
    Net Cap: 17,995 (MSRP - Down)
    Residual: 10,905.30 (MSRP * ALG Res)
    Financed: 7089.70 (Net Cap - Residual)
    Dep. Fee: 196.94 (Financed / Term)
    Fin. Fee: 2.06 (Payment - Dep. Fee)
    Money Factor: 0.00007 ((Net Cap + Residual) / Fin. Fee)
    Equiv. APR: 0.17% (Money Factor * 2400)
  • kyfdxkyfdx Posts: 72,944
    1) Manufacturer lease promotions rarely use ALG residuals. To do a proper calculation, you have to know the actual residual percentage.

    2) The disclaimer in the ad gives you the MSRP ($20915) and the capitilized cost ($19,165.11). Now, what they don't tell you, is if the Capitalized cost is the price of the car, to which you add the $595 acquisition fee, then subtract the down payment to get the Net CAP, or if the $19,165.11 is the actual Net Cap that the lease payment is based on.

    3) To apply the money factor, you have to add the net cap and the residual, not subtract. The amount financed is actually an average of the net cap and residual, not the depreciation.

    To actually figure a lease payment, you need four items:

    Net CAP cost
    Residual percentage (or actual residual)
    Money factor

    Including the lease payment as the 5th variable, you can solve for any variable, as long as the other four are known quantities.

    In Hyundai's example, only two numbers are known quantities (MSRP and lease payment), with possibly the CAP cost as 3rd known (but, even that is shaky). We don't know the residual or the money factor.

    So, everything else is just a guess.


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  • kyfdxkyfdx Posts: 72,944
    We can get the answer here: Hyundai Sonata Lease Questions

    Looks like the residual is 60% and the MF is .00048

    Using my handy-dandy spreadsheet, that means the actual NET CAP cost after accounting for acquisition fee and down payment is $19,165.11 (which, by the way... means they are only giving a discount from MSRP of $245!!)


    $183.78 depreciation
    $ 15.22 finance charge

    $199/mo. total..

    Great residual/MF, but not much of a discount.... I would guess with some negotiation, you could get the same payment while only putting $1500 or less, down..


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  • Interesting - thanks :)
  • cquenzcquenz Posts: 3
    I started negotiating the price of the ML 350 2WD in March. I have the price down around 45K but now the lease factor has changed.

    Questions -
    Does anyone know the current money factor? I
    s it based on credit rating?
    Does it change based on credit rating?
    Initially they told me .002 in March, then it changed to .0025 in April. after checking out this forum, I told them I saw .0015 - they told me that was available if my credit was over 750.

    Does money factor change based on the number of miles?

    What about the residual value? What %?
    Thanks so much!
  • rose33rose33 Posts: 17
    I would appreciate some help with my monthly lease payment. The numbers that the dealer has given me don't add up to the monthly payment. Here are the numbers:

    Net Cap Cost - 35,693
    Residual - 20319
    Finance Fee - .00241
    Sales Tax - 6%
    36 Month Lease

    The dealer is telling me that my monthly payment will be $561 (that includes tax - I double checked this) but I get a monthly payment of $595.77 when I calculate it. I thought for sure it was the tax, but I checked that with the dealer and he said tax is already included. Obviously, this mistake would be in my benefit, but I am leery of anything where the numbers don't add up right. And I don't want to put a deposit down and order the car only to have them say they made a mistake when I go to pick the car up. I would like to know what they could potentially be up to, if anything, before I raise this issue with him. Is this a huge red flag that I should be concerned with? Any advice would be greatly appreciated. Thanks!
  • delta737hdelta737h Posts: 606
    edited April 2010

    PMT = 0.00241 x (35693 + 20319) + (35693 - 20319) / 36 = 595.77

    Given the information that you provided, the only way your 595.77 payment includes tax would be if (a) you live in a state that collects all the tax upfront (like Ohio and New Jersey) and (b) the tax was capitalized in the lease (i.e., the net cap of 35693 includes the total sales tax). Otherwise, your payment, with tax, would be 595.77 x (1.06) = 631.52 if you live in a state that taxes the monthly payment and collects it monthly.

    Assuming that all the information you provided is correct, it appears as though the dealer has understated the payment. In order to determine this definitively, I would need to see the dealer's LEASE WORKSHEET. If you like, I can critique it for you. Just ask the dealer to FAX it or email it to you and, then, email it to me at

  • rose33rose33 Posts: 17

    Thanks so much for your help. I really appreciate it. I don't have the dealer's lease worksheet but I can get it.

    Regarding the payment, I calculated that the $595.77 payment already included the 6% sales tax - so I must be missing something. Here is how I determined the payment:

    Depreciation Fee (35,693 - 20319) / 36 = 427.06
    Finance Fee (35,693 + 20319) x .00241 = 134.99
    Sales Tax (427.06 + 134.99) x .06 = 33.72

    This adds up to $595.77 and includes the tax. The problem is that he's telling me my payment will be $561 including the tax. I just don't understand how he's arriving at that number given the cap cost, residual and money factor. I currently lease a car in my state and I pay my sales tax each month in my payment so that's why I added it into my calculation above.
  • delta737hdelta737h Posts: 606
    edited April 2010

    Sorry, you're quite right. My calc should be...

    PMT = 0.00241 x (35693 + 20319) + (35693 - 20319) / 36 = 562.04

    IF the net cap (35693) DOES INCLUDE SALES TAX, then the payment, including tax, is 562.04 and so the dealer would be correct.

    Unless you're absolutely certain, I need to know your state in order to determine how the tax is computed. Not all states tax the payment. If your state does tax the monthly payment and collects it monthly, then you are 100% correct when you calculated the monthly payment with tax to be...

    562.04 x 1.06 = 595.76

    The dealer's LEASE WORKSHEET will speak volumes and will tell me everything I need to know.

  • kl07rphkl07rph Posts: 22
    edited May 2010
    Hello, hopefully one of the moderators can assist me.

    I was previously shopping around for a 2010 X5, with a 36month, 15k mile/yr lease.
    Ended up purchasing instead.

    Just for my curiousity and guidance in the future, could one of the mods calculate a lease for me?
    MSRP 59175
    Initial Negotiated Price (Cap cost?): 56914
    Illinois State Sales Tax: 4568.18
    Registration: 194
    Docs: 154
    Electronic Filing: 25
    OTD Price incl. fees 61855.56
    Residual 60%
    MF 0.0023

    With my offered $5000 Cash Due, dealer was coming up with $891/month (inc tax), which for the life of me can not come up w/ those numbers! My calculations have been yielding a number in the high 700s/low 800s (i.e., calc gave me 804, w/ tax).

    I hope one of the mods can assist me. Thanks in advance!

    BTW, my wife and I purchased much lower than this dealer's quotes.
  • kyfdxkyfdx Posts: 72,944
    Yeah... I get around $805/mo, as well..

    But... more likely.. are you sure these are the correct residual and money factor for a 2010 model? Did the dealer give you these numbers? Because.. they look like the 2011 model numbers, to me...



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