Car lease calculator

How to calculate the total cost of your car lease

1. Get the sales price of the car. This is the price that you negotiate with the dealership, not the manufacturer-recommended price. You can find an estimate on sites like Kelley Blue Book or Edmund’s.
2. Subtract the down payment. Whatever you put down on the car
3. Subtract the resale price. Also known as the “estimated resale value,” this is what the car is worth at the end of the lease. Typically this is around 55% of the sale price of the car.
4. Calculate the interest. Divide the interest rate by the number of payments and multiply the result by the modified price of the car.
5. Calculate the total cost. Add the result to the modified price of the car.

Want to know how much you’ll pay each month? Divide the total cost by the number of payments on your lease.

How to compare two leases

When you’re comparing different leases to see which will work better for your budget, you can use these examples to help guide your expectations:

What do these car lease terms mean?

• Sale price

  The vehicle price can be either the manufacturer suggested retail price (MSRP) or the price you’ve negotiated. It will be the baseline you use to calculate your monthly payment and the total cost of your lease.

• Down payment

  Most leases require that you have a down payment that covers at least 10% of the vehicle’s value. However, the exact down payment you need will depend on your income and creditworthiness — the stronger your application, the smaller your down payment will likely have to be.

• Estimated resale value

  The estimated residual value is the amount the vehicle will be worth after the lease period ends. It typically accounts for depreciation as well as mileage and average wear and tear.

• Sales tax

  Sales tax is often bundled in the cost of your lease. The exact amount you pay will depend on your state and local statutes.

• Lease term

  The lease term is the amount of time you’ll be driving — and paying for — your vehicle. Usually, it lasts anywhere from one to three years.

• Interest rate

  The interest rate will have the most impact on the cost of your lease. It’s often referred to as the lease factor and will be written as a decimal. You can expect an interest rate from 3% to 15%, depending on your credit.

What other costs should I consider with a car lease?

When you decide to lease a car, there are other factors to consider than just the interest rate and monthly payment. Insurance, extra mileage and excessive wear can all increase the price of your vehicle.

• Insurance. Your lessor will likely require that you carry full coverage during your lease term. Depending on the make and model of your vehicle — as well as any past accidents — this can add a few hundred to a few thousand dollars to the yearly cost of your lease.
• Extra mileage. Most leases come with a set number of miles you can drive each year, usually between 10,000 and 15,000. If you go over, you may be charged a fee per mile.
• Wear and tear. If there’s any excessive wear on your vehicle, you may be charged a fee for damages and for potentially reducing the car’s resale value.
• Drive-off fees. Also known as the down payment, this is the amount you put down to drive the car off of the lot.
• Rebates and incentives. Some dealerships offer discounts like rebates to get you to buy their lease. Factor these in to get an idea of how much you’ll end up paying.

Bottom line

If you prefer to be behind the wheel of the latest car model or only plan on driving a few thousand miles each year, a car lease might be right for you. But calculating how much it will cost you in the short and long term can help ensure you find a lease that works with your budget and lifestyle or check out these tips to score a competitive deal on a car lease.

You can read our guide to leasing versus financing a car to learn more about your options.

Not sure leasing is right for you? Compare car loan options

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