Quick answer: a lease payment combines depreciation (price minus residual value, spread over the term) plus a finance charge based on the money factor. Use our free Car Lease Calculator to estimate your payment.
The Key Numbers
Residual value is what the car is predicted to be worth at lease end. Money factor is the lease's interest rate expressed differently — multiply by 2,400 to get an approximate APR.
Why Leasing Differs From Buying
You're only paying for the vehicle's depreciation during the lease term, not its full value — which is why lease payments are typically lower than loan payments for the same car, but you don't build equity.
Frequently Asked Questions
What's a good money factor?
Lower is better; multiply the money factor by 2,400 to compare it to an equivalent APR percentage.
Does a higher residual value mean a lower payment?
Yes — a higher predicted residual value means less depreciation to pay for, lowering the monthly payment.
Are there other lease costs beyond the monthly payment?
Yes, often a down payment, acquisition fee, and taxes are separate from the calculated monthly payment.
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