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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Open the Tool →What usually goes into a lease payment?
A simplified lease estimate starts with the vehicle price, the agreed amount due at signing, the estimated residual value at the end of the lease, and the number of months. Depreciation is the portion of the vehicle value used during the lease. The finance or “rent” charge, taxes, and fees are added according to the contract. The Consumer Financial Protection Bureau describes the basic depreciation step as subtracting the residual value from the amount being financed, then spreading that depreciation over the lease term.
For example, if the depreciation portion is $12,000 over 36 months, that portion averages about $333 per month before rent charges, taxes, and fees. This is not the complete payment. A real quote may also account for a down payment, trade-in credit, acquisition fee, mileage limit, local tax treatment, and other contract terms.
Compare offers using the same assumptions
Ask for the total amount due at signing, monthly payment, lease length, mileage allowance, residual value, and end-of-lease charges. Compare the full cost across the same term rather than comparing monthly payments alone. The CFPB leasing guide explains the main components. Actual contracts and tax rules vary, so use the written quote as the source of truth.
Questions to ask before signing
Confirm whether the quote includes tax, registration, delivery, and fees, and ask how the annual mileage limit and excess-mileage charge work. Check what counts as wear and tear, whether a security deposit is refundable, and what happens if you end the lease early. A lower monthly number can come with a larger amount due at signing or stricter conditions. Compare the total payments and obligations across the full term, then read the contract rather than relying only on an online estimate.