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Car Lease Payment: Depreciation, Money Factor & Tax

Calculate a simplified monthly vehicle lease payment from negotiated price, reductions, residual value, money factor and tax applied to the payment.

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Calculator inputs

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How to use this calculator

  1. Enter the known values in the units shown. Results update as you type.
  2. Where results are editable, change one to solve backwards. Lock a value to hold it fixed.
  3. Use the worked example to check the method. Reset restores the starting fields.

Use the result with context

Results are estimates for planning and education. Confirm rates, taxes, fees, and legal requirements with the relevant institution or a qualified professional before making a financial decision.

Formula and method

A 27,000 adjusted capitalized cost, 18,000 residual and 36-month term give 250 monthly depreciation. A 0.001 money factor adds 45, and 6% payment tax brings the total to 312.70.

Base payment = (adjusted cost − residual)/months + (adjusted cost + residual) × money factor

Worked example

Enter these known values and leave the other values blank.

MSRP
30000 USD
Negotiated selling price
28000 USD
Lease term
36 mos
Tax on monthly payment (%)
6 %
Residual value as % of MSRP
60
Money factor (decimal)
.001
Dealer fee
500 USD
Registration fee
0 USD
Down payment
1000 USD
Trade-in value
500 USD
Other reductions
0 USD
Total rent charge over the lease
1620 USD
Net capitalized cost
27000 USD
Residual value
18000 USD
Monthly depreciation fee
250 USD
Monthly rent charge
45 USD
Monthly lease payment (Excl.tax)
295 USD
Monthly sales tax
17.7 USD
Monthly lease payment (Incl. tax)
312.7 USD

Assumptions and limitations

  • The adjusted capitalized cost is negotiated price plus entered fees, less down payment, trade-in and other reductions. Use one consistent currency.
  • Money factor is entered as a decimal, not an APR or percentage. The rent charge uses adjusted cost plus residual, multiplied by that factor.
  • The tax model applies the entered percentage to each base monthly payment. Jurisdictions that tax the vehicle value, upfront charges or other bases require a different tax calculation.
  • This model requires a positive adjusted cost at least as large as the nonnegative residual, and nonnegative fees and reductions. Residual percentage is bounded from 0% to 100% of MSRP.
  • The monthly result excludes unentered charges, end-of-lease purchase cost, disposition fees, excess mileage and wear charges. It is an estimate of the entered lease structure.

Common questions

Is the money factor the annual interest rate?

No. This model uses the entered decimal directly in the rent-charge equation. An APR figure should not be entered into the money-factor field.

References

Bookify validates nonnegative lease fees and reductions, an adjusted cost covering residual value, and residual values from zero through MSRP.

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