Calculate monthly auto lease payments, total lease costs, and compare leasing vs buying options. Get detailed lease breakdowns and understand all lease terms and fees.
Auto leasing allows you to drive a new vehicle for a predetermined period by paying for its depreciation during the lease term. Unlike purchasing, you return the vehicle at lease end and don't build equity, but enjoy lower monthly payments and warranty coverage.
Lease payments are calculated based on the vehicle's depreciation (difference between negotiated price and residual value), financing charges (money factor), taxes, and fees. Understanding these components helps you negotiate better lease deals.
The portion of monthly payment covering vehicle depreciation
Interest cost based on the money factor (lease rate)
Your base monthly lease payment before additional fees
| Factor | Leasing | Buying | Best For |
|---|---|---|---|
| Monthly Payment | Lower | Higher | Cash flow management |
| Ownership | No equity | Build equity | Long-term value |
| Mileage | Limited (10k-15k) | Unlimited | High mileage drivers |
| Wear & Tear | Charges apply | Your responsibility | Careful drivers |
| Warranty | Usually covered | Expires eventually | Peace of mind |
| Modifications | Not allowed | Full freedom | Customization needs |
| Money Factor | Equivalent APR | Credit Tier | Typical Range |
|---|---|---|---|
| 0.0010 | 2.4% | Tier 1+ (Excellent) | 750+ credit score |
| 0.0015 | 3.6% | Tier 1 (Excellent) | 720-749 credit |
| 0.0025 | 6.0% | Tier 2 (Good) | 680-719 credit |
| 0.0035 | 8.4% | Tier 3 (Fair) | 620-679 credit |
| 0.0050 | 12.0% | Tier 4 (Poor) | Below 620 credit |
| Vehicle Category | 36-Month Residual | 48-Month Residual | Lease Popularity |
|---|---|---|---|
| Luxury Sedans | 55-65% | 45-55% | High |
| Luxury SUVs | 60-70% | 50-60% | Very High |
| Economy Cars | 45-55% | 35-45% | Moderate |
| Mid-size Sedans | 50-60% | 40-50% | Moderate |
| Sports Cars | 50-60% | 40-50% | High |
| Pickup Trucks | 55-65% | 45-55% | Low |
Most common option; walk away with no further obligation
Buy if market value exceeds residual value
Short-term solution while shopping for new vehicle
| Fee Type | Typical Amount | When Paid | Negotiable? |
|---|---|---|---|
| Acquisition Fee | $395-$995 | At signing | Sometimes |
| Security Deposit | $0-$500 | At signing | Yes |
| Documentation Fee | $200-$500 | At signing | Limited |
| Disposition Fee | $300-$500 | At lease end | Rarely |
| Excess Mileage | $0.15-$0.30/mile | At lease end | No |
| Excess Wear | Varies | At lease end | No |
Standard Allowances: Most leases offer 10,000, 12,000, or 15,000 miles per year.
Excess Mileage Costs: Typically $0.15-$0.30 per mile over the allowance.
Pre-purchase Option: Buy extra miles upfront at lower cost ($0.10-$0.15/mile).
Calculation Tip: Annual mileage × lease term = total allowed miles.
Sales Tax: Usually applied to monthly payments, not full vehicle price.
Business Use: Lease payments may be fully deductible for business vehicles.
State Variations: Some states tax the full lease amount upfront.
Registration: Vehicle registration typically handled by leasing company.
| Program Type | Benefit | Qualification | Typical Savings |
|---|---|---|---|
| Loyalty Lease | Reduced money factor | Current lessee | $10-50/month |
| Conquest Lease | Competitive incentive | Competitor lessee | $20-75/month |
| College Graduate | Waived security deposit | Recent graduate | $300-500 |
| Military | Early termination waiver | Active duty | Varies |
Early Termination Fee: Can be thousands of dollars, especially early in lease term.
Lease Transfer: Transfer lease to another party through services like SwapALease.
Military Clause: SCRA allows early termination for military deployment.
Total Loss: Gap insurance covers difference between insurance payout and lease balance.
Research Residual Values: Higher residuals mean lower payments.
Compare Money Factors: Shop multiple dealers for best lease rates.
Negotiate Selling Price: Lower cap cost reduces monthly payment.
Timing Matters: End of month/quarter/model year brings incentives.
Read the Fine Print: Understand all fees and restrictions before signing.