Calculate monthly car lease payments with MSRP, residual value, money factor, taxes, and drive-off costs breakdown.
A car lease payment combines depreciation, a rent charge, and applicable tax. This calculator uses the vehicle price, residual value, lease term, and money factor to separate those monthly components, then accounts for down payment and other drive-off amounts. The common input mistake is treating the money factor as an APR percentage. A money factor is a small decimal used directly in the lease calculation, so entering an APR in that field can produce a wildly overstated payment.
A concrete input and expected output from the current implementation.
Input
MSRP and capitalized cost: $30,000 Residual value: $18,000 (60% of MSRP) Lease term: 36 months Money factor: 0.00125 Sales tax: 0% Down payment and other upfront charges: $0
Expected output
Monthly depreciation: $333.33 Monthly rent charge: $60.00 Pre-tax monthly payment: $393.33 Monthly tax: $0.00 Monthly payment: $393.33 Drive-off total: $393.33 (first payment only)
Depreciation is ($30,000 - $18,000) / 36 = $333.33 per month, while the rent charge is ($30,000 + $18,000) x 0.00125 = $60.00. With no tax or additional upfront charges, the payment is $393.33 and the first payment is the entire drive-off amount.
The residual is the vehicle's expected value when the lease ends. Monthly depreciation equals adjusted capitalized cost minus residual value, divided by the number of months. The monthly rent charge equals adjusted capitalized cost plus residual value, multiplied by the money factor. Adding depreciation and rent produces the base monthly payment before tax.
The entered tax rate is applied to the taxable payment calculated by the tool. Drive-off is reported separately because money due at signing can include the first payment, a capitalized-cost reduction, acquisition or registration charges, and a security deposit. Only amounts that reduce capitalized cost lower the depreciation calculation; other upfront charges merely change when cash is paid.
No. The money factor is the decimal used directly in the lease rent-charge formula. Multiplying it by 2,400 gives a commonly used approximate APR percentage, so 0.00125 corresponds to about 3.0%. That conversion is useful for comparison, but an APR percentage should not be pasted directly into the money-factor field.
No. A capitalized-cost reduction lowers the amount used to calculate depreciation, but the first payment, registration charges, taxes, security deposit, and fees paid upfront generally do not reduce that amount. Review which entries the calculator treats as a down payment and which it lists only as cash due at signing.
The example and behavioral notes were checked against the browser implementation. Standards and primary references below define the relevant format, formula, or platform behavior.
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