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Car Lease Payment Calculator

2016 Hyundai Tucson

Avg. Price Paid:$18,144

MSRP:$22,700

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Our calculators are intended to produce rough estimates provided solely for informational purposes. You should not take action based on the information provided through this calculator alone. When available, we recommend you use interest rate information provided to you by your dealer or lender.

Car Lease Calculator

As new cars get more technologically advanced and more expensive, new car leasing has gotten more popular. However, if you’ve never done it before, leasing a car can seem confusing.

It doesn’t have to be. A new car lease is simply another way of borrowing money to pay for a car. There are two main differences between a car lease and a car loan: how much of the car’s value you borrow and what happens at the end of the lease or loan term.

When you finance a car, you’re borrowing money to pay for it, and you must borrow the entire price of the vehicle. For example, if you are buying a car that costs $50,000, you borrow $50,000 to pay for it. Your lender will charge you an interest rate, which is a percentage of the money you owe and acts as a sort of rental fee for the money you borrow. That interest rate is how your lender makes a profit. You make equal monthly payments over a set period of months, and when you’ve made all your payments, the car is yours. You own it, and you don’t make any more payments on it.

When it comes to leasing, you only borrow enough money to pay for the vehicle’s depreciation while you’re using it. Depreciation is the decrease in the vehicle’s value due to age and use. Let’s take that same $50,000 car from the example above. Let’s say you’re going to lease it for three years, and over those three years, it’s going to depreciate by $20,000. That $20,000 is the amount you effectively borrows from a lender when you lease a car. Instead of an interest rate, you’ll be a charged a money factor (which is really the same thing as an interest rate; it just has a different name). After making payments for the $20,000 over three years, you turn the vehicle back in to the lender. You never own it, and when your lease is up you can just walk away from it, with no more lease payments to make.

Still not sure if leasing is for you? Check out Buying vs. Leasing a Car and How to Lease a Car for more details. Make sure you also check out this month’s Best Lease Deals to find incentives on new car leases.

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Why Lease a Car?

For most people, leasing a car is appealing because it offers lower monthly payments than if you finance a car. Remember, instead of paying for the full price of the car, you only pay for the value it loses during your lease. Because you’re borrowing less money, your payments are lower. Leases also typically have less money due at signing – like a down payment – than financing a car does. To get the best rate when financing a car, many lenders will want you to come up with 20 percent of the car’s value as a down payment to get the best rate (though no-money-down car loans are available). With a lease, you often only need to come up with one or two thousand dollars at signing. Some lease specials require no money down.

A lower monthly payment isn’t the only advantage to leasing a car. Because leases only run for two or three years, you frequently get a new car, and that means you get the best and most up-to-date tech and safety technology in your car. This is particularly true if you’re interested in alternative powertrain technology. If you buy a hybrid now, you’ll own it for years and not be able to take advantage of any advances in EV or fuel cell tech. If you lease for three years, you’ll be able to take advantage of the latest powertrains – and if the new technology proves to be a dud, you won’t need to live with it long term.

Leasing is also a good choice if you’re not sure what your life will look like in a few years. Let’s say you’re newly married and thinking about having kids in a few years. If you lease a car for three years, it’s easy to get a crossover or minivan when the lease is up. If you buy a car, you’ll need to sell it, and potentially lose money, when you’re ready to have kids and need a larger vehicle.

Lease Payment Calculator

You know that when you lease a car, you’re paying for the depreciation, or value the car loses while you have it. However, you probably aren’t going to pay the full amount upfront, so you need to figure out what your monthly payments are going to be. Here’s what you need to use our lease payment calculator.

Vehicle Price

The vehicle price is the price you and the dealer agree on. Think of this as your starting point for figuring out lease costs. The vehicle price, less its depreciation, is the lease cost we’ve been talking about.

You can negotiate the car’s price when you’re leasing, just as you would if you were buying. In fact, getting a low vehicle price on your lease can save you a lot of money. Take the example from above, where you lease a car that has a price of $50,000 and will be worth $30,000 at the end of the lease. That lease costs you roughly $20,000 before fees and interest. If you negotiate the price down to $45,000 and the car is worth $30,000 at the end, your cost (before fees and interest) is $15,000. Every dollar you can get knocked off the vehicle price is one less dollar you have to pay when you lease.

Don’t want to negotiate? You can use our Best Price Program, where we negotiate the price of a vehicle for you with our certified dealers. People who use the program save an average of more than $3,000 off MSRP.

Save Thousands on Your Next Car

Join the more than 150,000 car shoppers who have purchased or leased a car through the U.S. News Best Price Program. Shoppers have seen average savings of $3,402 off MSRP across vehicles. learn more

Down Payment

While down payments on a car lease tend to be lower than down payments on a car purchase, some down payment is usually required. On most car lease deals, the down payment ranges from $0 to $3,000. If you’re not taking advantage of a lease deal, the down payment may be more flexible, but the more money you put down, the lower your monthly payments will be.

Let’s go back to our example. You want the $50,000 car and have negotiated the price down to $45,000. It will be worth $30,000 at the end of the lease, so your lease cost, before interest, taxes, and fees, will be $15,000 divided into equal monthly payments. If you put $2,000 down, the amount you make payments on drops to $13,000. That will not only lower your monthly payments but also decrease the money you’ll pay in interest because that’s $2,000 that will not be accruing interest over the life of the loan.

Residual Value

A car’s residual value is its value at the end of the lease. In our example, the $50,000 car (that you negotiated down to $45,000 because you’re such a good dealmaker) is worth $30,000 at the end of the lease. That $30,000 is its residual value – the leftover worth of the car after a certain amount of use. The difference between a car’s price and its residual value is the car’s depreciation.

Cars with high residual values and low depreciation make the best cars to lease because they lower your lease cost. Let’s say there are two cars that have the same price, but one depreciates (loses value) by $20,000 over a three-year lease and the other depreciates by $15,000. Since most of the lease cost is depreciation, you save by going with the car that has the lowest depreciation and thus the highest residual value.

Another benefit of leasing is that the residual value is set when you sign a lease. That means that if market forces change and the car loses value faster than expected, you’re not on the hook for the difference like you would be if you owned the car and wanted to sell it. With a lease, you can just walk away at the end because you’ve paid for your part of the agreement – the depreciation that was set when you signed the lease. However, if the car is worth more than the residual value, check your lease agreement. You may be able to keep the difference between what dealers are willing to pay for the car and its residual value as equity. That money can help you make a down payment on your next lease.

There are companies that set a car’s residual value for the automotive industry. By searching the internet for “residual value“ and the car you want, you should be able to find a ballpark figure to use in your calculations.

Estimated Sales Tax

The estimated sales tax is the sales tax rate that your state charges on car sales in your state. Make sure you check the laws in your state, so you’re only paying sales tax on the cost of your lease, not the total cost of the car. The cost of the sales tax is usually folded into your monthly lease payments.

Estimated Interest Rate

In a lease, an interest rate is called a money factor. You can convert a money factor into a simple interest rate by multiplying it by 2,400. So if you’re offered a money factor of .004, multiply it by 2,400 and see that it translates to an interest rate of 10 percent.

The money factor you’re offered in a lease depends mainly on your credit score, which is how lenders assess the risk that you won’t pay them back for the money you want to borrow. You should always convert the money factor on any new car lease into an interest rate to see if it’s in line with the type of financing you’d qualify for. You can get financing offers before you go to the dealer to get an idea of the rates you qualify for. That way, you can check to be sure that the money factor lines up with your credit score, and save yourself thousands in interest payments.

Let’s do a quick example to illustrate this