# How to Calculate Monthly Lease Payments

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.

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)

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)

To determine your vehicle's depreciation, subtract its residual value from your capitalized cost. (example: $24,000 - $18,000 = $6,000 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)

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)

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:

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:

**MSRP**

Capitalized cost (negotiated price minus any downpayment)

Residual value percentage

Bank/Finance company's money factor

Lease term, in monthsCapitalized cost (negotiated price minus any downpayment)

Residual value percentage

Bank/Finance company's money factor

Lease term, in months

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## Comments

10The 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

11,042MODERATORNeed help navigating? kirstie_h@edmunds.com - or send a private message by clicking on my name.

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10kirstie h

3MSRP 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>>>>

11,042I 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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11Honda 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

4wd

12,000 miles

3,60219,897You are forgetting the Aquisition Fee that (I believe) all manufactures charge on leases. Honda charges 595.00 and that is probably typical.

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10http://www.hyundaiusa.com/financial-tools/special-offers.aspx

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)

72,824know the actualresidual 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

addthe net cap and the residual, not subtract. The amount financed is actually anaverageof the net cap and residual, not the depreciation.To actually figure a lease payment, you need four items:

MSRP

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.

MODERATORPrices Paid, Lease Questions, SUVs

72,824Looks like the residual is 60% and the MF is .00048

Using my handy-dandy spreadsheet, that means the

actualNET 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!!)So...

$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..

MODERATORPrices Paid, Lease Questions, SUVs

103Questions -

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!

17Net 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!

606PMT = 0.00241 x (35693 + 20319) + (35693 - 20319) / 36 = 595.77

Given the information that you provided, the only way

your 595.77 paymentincludes 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

understatedthe 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 atdiffeq@zoominternet.net

John

17Thanks 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.

606Sorry, 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.

John

22I 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., leaseguide.com 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.

72,824But... 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...

regards,

kyfdx

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