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Auto Lease Calculator With Monthly Payment

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months
%
Calculated Results
Auto Price19,463.66
Depreciation Charge269.32
Finance Charge60.87
Before Tax330.19
Sales Tax19.81
Total Lease Payment8,400.00
Total Cost Buy After Lease22,180.00
If Purchase Under the Same Condition
Monthly Payment900.52
Sales Tax1,167.82
Loan Amount20,631.48
Total Interest980.97
Total Loan Payment21,612.46
Total Cost21,612.46
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How to Calculate monthly lease payment
There are three components in a lease payment: depreciation charge, finance charge and sales tax. The monthly lease payment is the sum of these three components.
  • Depreciation charge is the difference of the capitalized cost subtracts the residual value. The capitalized cost is the car price subtracts the downpayment. The monthly value of depreciation is the total depreciation divided by the number of month of the lease term.
  • Finance charge is calculated by the average capitalized cost multiples the monthly interest rate. The average capitalized cost is calculated using the half of the initial capitalized cost (car price - down payment) plus the ending capitalized cost (car residual value). Therefore, the formula is: \[ Rate \times (Price - DownPayment + Residual) \div 24 \]
  • Tax is calculated by the monthly depreciation charge plus the finance charge and then apply the tax rate on it.

Auto Lease Explained

In the new car market, leasing account for about one-third of the market share. According to Edmunds, the average price of a new car is around $37,000, and the average car loan payment is $560 a month for 60 months after a $6,000 down payment in 2019.

New cars are expensive, and leasing is the cheapest way to get into a new car. A car lease lets you drive a new vehicle without paying a large sum of cash or taking out a car loan to buy it. To lease a car, you simply make a small down payment, usually less than the typical 20% when you buy, followed by monthly payments for the term of the lease. When the term expires, you return the car.

When a consumer leases a new vehicle, the consumer is getting into a special deal with an auto dealer. Instead of buying the entire vehicle, the lease buyer pays for any depreciation incurred over the entire cost of a lease (normally two or three years), plus any fees and costs incurred within the leasing period.

There are two key auto financing concepts in auto leasing - capitalized cost and residual value.

Basically capitalized cost is the buy outright price for the vehicle you want to lease. You should negotiate the capitalized cost just as if you were buying it. Residual value is the likely value of the vehicle at the end of the lease and is almost never up for bargaining. Just like you guess it, the amount you pay for a leased auto represents the cap cost minus the residual value, with interest and fees added into the price.

We know that it can be difficult deciding on a vehicle, as well as picking which financing option better suits your needs. There is no one-size-fits-all solution and each option has distinct pros and cons.

Leasing a car has some drawbacks. Among them:

  • In the long term, say 10 years, the cost of leasing several cars will likely exceed, sometimes by a lot, the purchase price of a new or used car.
  • When your lease expires, you don’t own and have to return to the car dealer. You essentially rent the car, and you will have to get another vehicle for your everyday use at the end of the lease.
  • Lease terms may carry steep penalties and you may have to pay penalties when:
    • Exceed the number of miles in your lease contract.
    • Fail to keep the interior and exterior of the car in good condition.
    • Drive the car hard and inflict significant wear and tear on the car’s performance and appearance.
    • Want to return the car before your contract expires.

Leasing is more beneficial than buying when you:

  • Don’t have the cash to buy the car.
  • Want to drive a vehicle that’s out of your purchase price range.
  • Won’t likely exceed the mileage cap in a contract—usually between 10,000 and 15,000 miles per year. Exceeding the mileage limits on your lease can cost you 10 to 20 cents per mile.
  • Can take good care of the car’s exterior and interior, paying particular attention to avoid nicks, spills and other cosmetic damage.
  • Expect to lease another car when your vehicle’s current contract expires.