Auto Lease Calculator
Calculate and compare car lease payments and costs
Auto Lease Calculator
Understanding Car Leases:
Leasing a vehicle allows you to drive a new car for a fixed period while making monthly payments that are typically lower than loan payments for the same vehicle.
When you lease, you're essentially paying for the vehicle's depreciation over the lease term, plus finance charges and fees.
Key Lease Terms:
The estimated value of the vehicle at the end of the lease term. Higher residual values result in lower monthly payments.
Equivalent to an interest rate. Multiply by 2400 to convert to APR. For example, a money factor of 0.0025 equals a 6% APR.
The negotiated price of the vehicle, minus any down payment or trade-in value, plus any fees added to the lease.
The length of the lease, typically 24, 36, or 48 months. Shorter terms mean higher monthly payments but less overall depreciation.
Lease vs. Buy Considerations
- Lower Payments: Leasing typically offers lower monthly payments than buying
- New Cars More Often: Lease terms are shorter than loan terms, allowing you to drive newer vehicles
- Mileage Limits: Leases restrict annual mileage (usually 10,000-15,000 miles)
- No Equity: Unlike buying, you don't build equity in the vehicle
- Modification Restrictions: Leased vehicles must be returned in original condition with only normal wear and tear
Average U.S. Lease Terms (2023)
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Lease vs. Purchase Comparison
| Criteria | Lease | Purchase | Difference |
|---|---|---|---|
| Down Payment | $3,000.00 | $7,000.00 | $-4,000.00(Less) |
| Monthly Payment | $0.00 | $0.00 | $0.00(More) |
| Total Payments | $0.00 | $0.00 | $0.00(More) |
| Net Cost (after 36 months) | $0.00 | $0.00 | $0.00(Premium) |
| Ownership After Term | No | Yes | - |
Understanding Auto Lease Terms
Key Lease Terminology
Capitalized Cost
The negotiated price of the vehicle plus any added fees or taxes being financed in the lease. This is the amount the leasing company is financing. A lower capitalized cost means lower monthly payments.
Residual Value
The projected value of the vehicle at the end of the lease term. This value is set by the leasing company at the beginning of the lease. Higher residual values result in lower monthly payments since you're paying for less depreciation.
Money Factor
This is essentially the interest rate on your lease, expressed in a unique format. To convert to APR, multiply the money factor by 2400. For example, a money factor of 0.00125 equals a 3% APR (0.00125 × 2400 = 3%).
Mileage Allowance
The number of miles you're allowed to drive per year without penalties. Standard allowances are usually 10,000, 12,000, or 15,000 miles per year. Exceeding this limit results in excess mileage charges, typically ranging from $0.15 to $0.30 per mile.
Common Lease Fees
Acquisition Fee
An upfront administrative fee charged by the leasing company, typically ranging from $595 to $995. This fee covers the cost of setting up the lease and is often non-negotiable.
Disposition Fee
A fee charged at the end of the lease when you return the vehicle, typically $300-$500. This covers the costs associated with preparing the vehicle for resale after you return it.
Security Deposit
Some leases require a refundable security deposit, usually equal to one month's payment rounded up to the nearest $50. This may be waived for customers with excellent credit.
Documentation & Registration Fees
These fees cover the costs of processing paperwork and registering the vehicle. Documentation fees vary widely by dealership, while registration fees are set by your state's DMV.
Excess Wear and Tear Charges
Fees for returning the vehicle with damage beyond normal wear and tear. These can be significant, so understanding what constitutes "excess" wear is important.
Lease vs. Buy: Which is Right for You?
Leasing Might Be Better If:
- You prefer driving a new car every few years
- You want lower monthly payments
- You don't want to worry about major repair costs
- You drive a predictable number of miles annually
- You use the vehicle for business (potential tax advantages)
- You don't want to deal with selling or trading in a vehicle
Buying Might Be Better If:
- You plan to keep the vehicle for many years
- You drive more than 15,000 miles per year
- You want to build equity in an asset
- You want to customize or modify your vehicle
- You don't want mileage restrictions
- You anticipate significant wear and tear
Long-term Cost Comparison: While leasing typically offers lower monthly payments, buying is usually more economical in the long run if you plan to keep the vehicle for many years. The break-even point is typically around 5-7 years of ownership, after which buying becomes the more cost-effective option.
Flexibility Considerations: Leasing provides the flexibility to easily upgrade to a new vehicle every few years, but comes with restrictions on mileage, modifications, and wear and tear. Buying provides the freedom to drive, modify, and sell the vehicle on your own terms.