Calculating Car Lease Deals

lease payment calculatorIf you have ever leased a car, or are thinking about leasing, have you wondered if a dealer is doing the math correctly on the lease contract form? Is the monthly payment amount correct, given the price of the car, the residual, and other charges? It’s not uncommon for there to be “mistakes” in lease contracts. But how would you know?

The only way to verify a dealer’s calculations is to be able to do the same calculations yourself, either manually or with a calculator. The standard lease formula used by all car dealers and lease finance companies is explained in the article, Car Lease Payment Formula.

Knowing the formula will allow you to do the calculation manually or with a simple hand calculator, but it’s easier if you use an online lease calculator such as the one provided here by If you use an Apple iPhone or iPad, you should use the non-Flash version here.

You can also set up your programmable financial calculator to do the lease calculations. You can find instructions here to set up the popular HP 17BII+ business calculator. If you don’t own a financial calculator, you can buy an HP 17BII+ app for your iPhone or iPad on Apple iTunes. It works exactly the same as the real 17BII+ and the instructions in the above article work the same. Using the programmed formula, you can solve for any lease factor if you know the others.

One of the numbers you’ll need to do lease payment calculations is money factor. It’s the finance rate, like interest on a loan but unlike with loan agreements, money factor is not shown on a lease contract. In order to use the lease payment formula, you’ll have to ask your dealer for this important number. The number is very small, such as .00192, which shouldn’t be confused with interest rate. However, if you are given interest rate (APR), it can be converted to lease money factor simply by dividing interest rate by 2400. For example, 3.9% APR is equivalent to .001625 money factor.

If you know your dealer’s math is correct but want to know if your lease is a good deal, you can use our Lease Deal Evaluation Calculator.

Of if you want to compare the cost of leasing versus buying, there is the Lease vs. Buy Calculator.

We are often asked the question,”Your calculator and lease formula don’t give the same results as my dealer’s. What’s wrong with your calculator and formula?”

Answer: There is nothing wrong with our calculator and formula. It’s exactly the same formula used by dealers and lease finance companies. Therefore, if there is a difference between your results and a dealer’s results, it’s because he hasn’t given you the same numbers he’s using in his calculations. If both you and the dealer use the same numbers, the results will be exactly the same, down to the penny.


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