Car Lease Payment Calculator
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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.
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 sav