Lease Payment Calculator (Money Factor)
Estimate a car lease payment from the cap cost, residual, money factor and term — with the money factor converted to a plain APR.
How it works
Residual = cap cost × residual% · Adjusted cap = cap cost − down · Depreciation = (adjusted cap − residual) ÷ term · Rent charge = (adjusted cap + residual) × money factor · Payment = (depreciation + rent charge) × (1 + tax%) · APR ≈ money factor × 2400
A lease payment has two parts: depreciation — the value the car loses while you drive it — spread over the term, plus a rent charge on the money tied up, set by the money factor. The money factor is just an interest rate in disguise; multiply it by 2400 to read it as an APR. A higher residual means less depreciation to pay for, which is why cars that hold value lease cheaply.
Worked example
On a $35,000 car with a 55% residual ($19,250), $3,000 down and a 0.0025 money factor over 36 months: depreciation is (32,000 − 19,250) ÷ 36 = $354.17, the rent charge is (32,000 + 19,250) × 0.0025 = $128.13, so the base is $482.30 — about $520.87 with 8% tax. The 0.0025 factor equals a 6% APR.
Frequently asked questions
What is a money factor?
It is the lease equivalent of an interest rate, expressed as a small decimal. Multiply it by 2400 to convert to an APR — a 0.0025 money factor is a 6% APR. Dealers quote the factor because the tiny number looks less alarming than the rate.
Does a bigger down payment lower the payment?
Yes, a cap-cost reduction lowers both the depreciation and rent portions. But putting a lot down on a lease is risky: if the car is totaled early, that money is generally gone, so many advisors keep lease down payments small.
Why does the residual matter so much?
You only pay for the value the car loses. A high residual means it keeps its value, so there is less depreciation to fund — that is why the same monthly budget leases a value-holding car far more cheaply than one that depreciates fast.
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Educational estimate, not financial advice.