How to Calculate a Lease Payment for a Car

To get a fair lease payment on a car, seek the lowest net cap cost and money factor and the highest residual. These car-lease terms help you to see beyond the bottom-line figures on your lease contract. Understand the dealer's secret language and you can spot hidden fees and mistakes that otherwise would be unnoticed. Calculate your payments easily and avoid paying a premium while enjoying the benefits of leasing a car.

Instructions

1

Obtain the gross cap cost, residual and term, or money factor, information from the dealership where you obtained the lease. The residual is the resale value or residual value at the end of lease. The term is the length in months of your lease. The money factor is a figure that dealers use to calculate finance charges and interest rates on the lease.

2

Calculate the net cap cost. Add the price you negotiated with the dealer, the dealer fees, taxes that will not be paid in cash upfront and balances of prior loans to get the gross cap cost. From the gross cap cost, subtract the cap cost reductions, which are the trade-in value, the down payment and any rebates, to get the net cap cost. Do not include upfront cash paid to cover lease charges when you signed your lease.

3

Calculate the depreciation fee. Subtract the residual from the net cap cost and then divide the remainder by the term.

4

Calculate the total finance fee. Add the net cap cost and the residual. Multiply that sum by the money factor.

5

Calculate your monthly finance fee. Locate the rent/lease charge on your lease contract; divide that figure by the term to arrive at the monthly fee.

6

Calculate the lease money factor. Divide the lease/rent charge by the sum of the net cap cost and the residual; multiply that quotient by the term.

7

Calculate your APR interest rate by multiplying the money factor by 2,400.

8

Calculate your total monthly payment. Add the depreciation fee and finance fee. Add any sales tax that is applicable in your state.