Car Lease Calculator
Work a lease payment out from the price, the residual value and the rate, and see how much of it is the car losing value and how much is interest.
Results
What this tool does
A lease payment is two things added together, and dealers quote the total. One part pays for the value the car loses while you have it — the price less what it is worth at the end, spread over the months. The other is interest on the money tied up in it. Splitting them tells you what you are actually buying: if the finance half is large, the rate is doing the damage; if the depreciation half is large, it is the car.
Formula
lease payment = (price − down payment − value residual) ÷ months + (price − down payment + residual) × annual rate ÷ 2400
Variables
| Symbol | Meaning | Unit |
|---|---|---|
p | Price of the car | — |
rv | Residual value | — |
m | Months of the contract | mo |
r | Interest rate a year | % |
dp | Paid up front | — |
M | Monthly payment | — |
D | Monthly share of the loss in value | — |
F | Monthly interest | — |
T | Total you will pay | — |
I | Of it that is interest | % |
Worked example
- Price of the car30,000
- Residual value15,000
- Months of the contract36 mo
- Interest rate a year6 %
- Paid up front3000
- Monthly payment438.33
- Monthly share of the loss in value333.33
- Monthly interest105.00
- Total you will pay18,780.00
- Of it that is interest20.1 %
Limitations
- This is an informational calculator, not personalised financial advice. Rates, fees, taxes and contract conditions vary between institutions and countries.
- Tax rates and rounding rules differ between countries and sometimes between regions. Use the rate that applies to your invoice.
Frequently asked questions
Why is the interest worked out on the price plus the residual?
Because over the contract the amount you owe falls steadily from the full price down to the residual value, and the average of a straight line between two numbers is their sum divided by two. That is exactly what dividing by 2400 does: it halves the sum and turns an annual percentage into a monthly one in a single step. It is the same arithmetic the industry hides behind the phrase "money factor".
What is not in this number?
Tax, which varies by country and is often added on top of the payment rather than inside it; the arrangement fee, the delivery fee and the charge at the end for returning the car; insurance and servicing, unless your contract bundles them; and the penalty for going over the mileage allowance, which is the item that catches most people. Ask for those in writing before comparing two offers on the monthly figure alone.