Auto Lease Calculator Nerdwallet

Leasing an auto can be a smart financial decision, offering lower monthly payments and the ability to drive a new car without a large upfront cost. Our auto lease calculator helps you estimate your monthly payments, understand the total cost of leasing, and compare different lease options.

How to Use This Calculator

To use our auto lease calculator, follow these simple steps:

Enter the vehicle price (the MSRP or invoice price of the vehicle).
Select the lease term (typically 24, 36, or 48 months).
Enter the down payment (the amount you'll pay upfront).
Enter the monthly payment (the amount you'll pay each month).
Enter the money factor (a rate used to calculate the lease payment).
Click the Calculate button to see your estimated lease payment and total cost.

The calculator will display your estimated monthly payment and the total cost of the lease over the term. You can also see a breakdown of the costs and a comparison of different lease options.

How Auto Leasing Works

Auto leasing is a financial arrangement where you pay for the use of a vehicle over a set period, typically 24 to 48 months. Here's how it works:

Down Payment: You pay an upfront amount, typically 10-20% of the vehicle's value.
Monthly Payments: You make regular payments that cover the cost of the vehicle, interest, and fees.
End of Lease: At the end of the lease term, you have options to return the vehicle, lease a new one, or purchase it.

Leasing can be a good option if you want to drive a new car without a large upfront cost or if you plan to upgrade frequently. However, it's important to understand the total cost of leasing, including fees and the potential cost of returning the vehicle.

Lease Payment Formula

The monthly lease payment is calculated using the following formula:

Monthly Payment = (Vehicle Price - Down Payment) × Money Factor

The money factor is a rate that includes the interest and fees associated with the lease.

Example Calculation

Let's say you want to lease a car with a price of $30,000, a down payment of $3,000, a lease term of 36 months, and a money factor of 0.008.

Using the formula:

Monthly Payment = ($30,000 - $3,000) × 0.008 = $24,000 × 0.008 = $192

So, your estimated monthly payment would be $192.

Lease vs. Purchase Comparison

When deciding between leasing and purchasing a car, it's important to compare the costs and benefits of each option. Here's a simple comparison:

Factor	Lease	Purchase
Upfront Cost	Lower (typically 10-20%)	Higher (often 10-20% down payment)
Monthly Payments	Lower (fixed payments)	Higher (varies with interest rates)
Total Cost	Higher (due to fees and interest)	Lower (if financed with good rates)
Ownership	No ownership (must return vehicle)	Ownership (can keep vehicle)
Flexibility	Can upgrade frequently	Less flexible (long-term commitment)

Leasing can be a good option if you want to drive a new car without a large upfront cost or if you plan to upgrade frequently. However, purchasing can be a better option if you want to own the vehicle and build equity.

FAQ

How is the monthly lease payment calculated?

The monthly lease payment is calculated using the vehicle price, down payment, lease term, and money factor. The formula is: Monthly Payment = (Vehicle Price - Down Payment) × Money Factor.

What happens at the end of the lease term?

At the end of the lease term, you have options to return the vehicle, lease a new one, or purchase it. The cost of returning the vehicle depends on its condition and mileage.

Is leasing cheaper than purchasing a car?

Leasing can be cheaper in the short term because you pay lower monthly payments. However, the total cost of leasing is often higher than purchasing due to fees and interest. It depends on your financial situation and goals.