Prorated Tax Calculator

Car Lease Payment Calculator

24 Months 36 Months 48 Months 60 Months

Estimated Monthly Payment

$0.00

Depreciation Fee:

Rent Charge:

Residual Value:

Total Tax:

function calculateLease() { var vehiclePrice = parseFloat(document.getElementById('vehiclePrice').value); var downPayment = parseFloat(document.getElementById('downPayment').value) || 0; var tradeIn = parseFloat(document.getElementById('tradeIn').value) || 0; var residualPercent = parseFloat(document.getElementById('residualPercent').value); var leaseTerm = parseInt(document.getElementById('leaseTerm').value); var moneyFactor = parseFloat(document.getElementById('moneyFactor').value); var salesTax = parseFloat(document.getElementById('salesTax').value) || 0; if (isNaN(vehiclePrice) || isNaN(residualPercent) || isNaN(moneyFactor)) { alert("Please fill in all required fields with valid numbers."); return; } var grossCapCost = vehiclePrice; var capCostReductions = downPayment + tradeIn; var adjustedCapCost = grossCapCost – capCostReductions; var residualValue = (residualPercent / 100) * vehiclePrice; // Monthly Depreciation Fee = (Adjusted Cap Cost – Residual Value) / Term var depreciationFee = (adjustedCapCost – residualValue) / leaseTerm; // Monthly Rent Charge = (Adjusted Cap Cost + Residual Value) * Money Factor var rentCharge = (adjustedCapCost + residualValue) * moneyFactor; var basePayment = depreciationFee + rentCharge; var taxAmount = basePayment * (salesTax / 100); var totalMonthlyPayment = basePayment + taxAmount; document.getElementById('monthlyTotal').innerText = "$" + totalMonthlyPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('depreciationVal').innerText = "$" + depreciationFee.toFixed(2); document.getElementById('rentVal').innerText = "$" + rentCharge.toFixed(2); document.getElementById('residualVal').innerText = "$" + residualValue.toFixed(2); document.getElementById('taxVal').innerText = "$" + taxAmount.toFixed(2); document.getElementById('leaseResult').style.display = 'block'; }

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How a Car Lease Payment is Calculated

Understanding your car lease payment is crucial for negotiating the best deal at the dealership. Unlike a traditional car loan, where you pay for the entire value of the car, a lease only requires you to pay for the vehicle's depreciation during the time you drive it, plus interest and taxes.

Key Lease Components Explained

• Negotiated Vehicle Price: Also known as the "Gross Capitalized Cost," this is the final price you agreed upon for the vehicle. Never lease based on the MSRP alone; always negotiate the price first.
• Residual Value: This is what the car is expected to be worth at the end of your lease. It is set by the leasing company. A higher residual value usually leads to a lower monthly payment because the car "loses" less value.
• Money Factor: This is essentially the interest rate on a lease. To convert a money factor to a standard APR, multiply it by 2,400. For example, a money factor of 0.0015 is roughly equivalent to 3.6% APR.
• Cap Cost Reductions: This includes your down payment and any trade-in equity. These values are subtracted from the vehicle price to lower the "Adjusted Capitalized Cost."

The Lease Formula

The math behind a lease consists of two main parts: the Depreciation Fee and the Rent Charge.

Monthly Payment = [(Adjusted Cap Cost – Residual) / Term] + [(Adjusted Cap Cost + Residual) × Money Factor]

Leasing Example

Imagine you are leasing a $40,000 SUV for 36 months. The residual value is 60% ($24,000), the money factor is 0.00125, and you put $2,000 down.

1. Adjusted Cap Cost: $40,000 – $2,000 = $38,000.
2. Depreciation Fee: ($38,000 – $24,000) / 36 = $388.89.
3. Rent Charge: ($38,000 + $24,000) * 0.00125 = $77.50.
4. Base Payment: $388.89 + $77.50 = $466.39.
5. Total with Tax (8%): $466.39 * 1.08 = $503.70 per month.

Should You Lease or Buy?

Leasing is ideal for drivers who want a new car every 2 to 3 years, prefer lower monthly payments, and drive a predictable number of miles annually. However, buying is better for those who keep their cars for a long time (5+ years) or drive significantly more than 12,000–15,000 miles per year, as leases carry heavy penalties for excess mileage.