Car Lease Calculator

Omni's car lease calculator allows you to estimate your monthly car lease payments. Just enter some basic information like MSRP, lease term, interest rate, residual percentage, sales tax, etc., and we will give you a close estimate of your monthly lease payments.

Thinking about owning your dream car but don't know whether you can afford it? Or just confused about whether to buy or lease a car? Worry not! Our car lease calculator can help you to make this decision. Read on to learn how to calculate car lease payments. You will also find some basic information on how does leasing a car work.

Car leasing is when you use a vehicle for a fixed time period and pay a monthly fee. Leasing is more like renting, and thus as a user/renter, you don't have any ownership over the car. After the leasing period is over, you must return the car to the owner (dealer).

Some of the benefits of leasing a car are:

• Affordability: Monthly car lease payments are usually lower than car loan EMI (equal monthly installments). So, you get to drive your favorite car without making hefty monthly payments.
• Low maintenance: You mostly lease a new car for 2-3 years. Hence, you are covered by the manufacturer's warranty during your entire lease and may not have to worry about any maintenance-related issues.
• Tax-benefits: The lease amount is eligible for tax relief, especially if you use the car for your business.
• Hassle free: You don't have to worry about selling your used car. Just return it to the dealer at the end of the lease.

Let us see how to calculate the car lease payment using our car lease calculator:

1. Enter the MSRP (manufacturer's suggested retail price or the sticker price) and the final negotiated selling price of the car.
2. Type in the duration of your lease and the sales tax rate of your state.
3. Input the money factor (or the lease charge) and the residual value percentage of the car. You can get this information from your dealer.
4. You can also add additional information, for example, the dealer fee, registration fee, down payment amount, trade-in value, and any other reductions.
5. The calculator will display an estimate of your monthly lease payment amount (with and without taxes).

To learn more about lease payments, check out our lease calculator.

To calculate car lease, we will use the following set of formulae.

• Net capitalized cost is the total amount on which the lease is financed. Usually, you negotiate with the dealer to reduce the manufacturer's suggested retail price (MSRP) of the car. The dealer may offer you other reductions as a part of their sales policy. You can calculate the net capitalized cost by considering all the reductions and applicable fees:

  net capitalized cost = (MSRP (or negotiated selling price) + dealer fee + registration fee + other expenses) - (trade-in value + down payment + other reductions)

• Residual value is the value of the car at the end of the lease term. The dealer usually provides you with a residual value percentage so that you can determine the residual value as:

  residual value = MSRP × residual value percentage

• Depreciation value is the reduction in the value of the car over time. The depreciation value of a car depends on the term of the lease and mileage. To calculate the depreciation value of a car, we will use the formula:

  depreciation value = (capitalized cost - residual value) / lease term

• Money factor determines the monthly interest you will pay during the term of your lease. Your dealer can provide you the information about the money factor of the car/model you want to buy. To calculate the money factor, you can use two formulas:

  money factor = annual percentage rate / 2400

  …or:

  money factor = lease charge / [(capitalized cost + residual value) × lease term]

• Monthly interest can be calculated as:

  monthly interest = (net capitalized cost + residual value) × money factor.

• Taxes will depend upon which state you live in. To calculate your monthly tax amount, use the formula:

  monthly tax amount = (depreciation value + monthly interest) × sales tax

• Total monthly lease payments that you have to make for leasing your car is the sum of the depreciation value, monthly interest, and any taxes:

  monthly lease payment = depreciation value + monthly interest + monthly tax

Let us find out how much it costs to lease a car for 36 months using an example. We will consider a car with an MSRP of $30,000. However, being a good negotiator, we got it for $28,000. Let the dealer fee and the registration fee be $300 and $1,000, respectively.

According to the dealer, this car will have a residual value of 60% and a money factor of 0.001. We will also assume that we traded our old car in for $5,000, and we made a down payment of $2,000.

1. Multiply the residual percentage value (60%) with the MSRP ($30,000) to get the residual value:

   $30,000 × 60 / 100 = $18000

2. Calculate the net capitalized cost by adding all the fees (dealer, registration, etc.) to the negotiated sales price ($28,000). Then subtract any reductions, trade-ins or down payment, etc.:

   ($28,000 + $1,000 + $300) - ($5,000 + $2,000) = $22,300

3. Subtract the residual value from the net capitalized cost and divide the result by the lease term (36 months). You will get the monthly depreciation amount or your base lease payment amount:

   ($22,300 - $18,000) / 36 = $119.44

4. To calculate your monthly rental, add the residual value to the net capitalized cost and multiply the result by the money factor:

   ($22,300 + $18,000) × 0.001 = $40.3

5. Add your monthly rental to the base lease payment amount to get the pre-tax lease amount:

   $40.30 + $119.44 = $159.74

6. Calculate the monthly sales tax by multiplying the local tax rate with the pre-tax lease amount:

   6 × $159.74 / 100 = $9.58

7. Add the monthly sales tax to the pre-tax lease amount, and you will get the total monthly lease payment:

   $9.58 + $159.74 = $169.33

We recommend you cross-check these results using our car lease calculator and see how quickly you can calculate your car lease payments without having to remember all these formulae.

In case you want to buy a car instead of leasing, we recommend checking out our auto loan calculator.