Car Lease Calculator

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When shopping for a new car, consumers have many options. One of those options includes leasing a car. In this publication, we're going to share with you a car lease calculator. This calculator is going to be an Excel workbook, sometimes referred to as a spreadsheet, which you can use to calculate monthly car lease payments.

Car Lease Spreadsheet

The car lease calculator we've put together is a spreadsheet that is as sophisticated as any other online version you'll find on the Internet. Since we're providing this as a free tool that you can download, we think this offering provides more flexibility than many of the other calculators you'll stumble across.

Additional Resources

The remainder of this article will be dedicated to providing you with detailed instructions. This will reduce any confusion over the use of the calculator. We'll also explain some of the terminology you might encounter when evaluating with a car lease. Finally, as appropriate, we've provided some example values, or suggested values, to use in the spreadsheet.

Car Lease Calculator Instructions

You can download our calculator by clicking on the following link: Car Lease Calculator. Once you've opened the spreadsheet in Excel (the spreadsheet should also work in OpenOffice Calc or Lotus 123), you will notice that the calculator already contains example information for a typical car lease. All you need to do is overwrite the example values in the calculator with the car lease information you're evaluating.

When a cell value is "blue," this indicates a need for an input. The remaining cells are used for spreadsheet calculations or explanations.

Gross Capitalized Cost

The first value that we are going to calculate is the gross capitalized cost of the vehicle. The important inputs include:

MSRP - Manufacturers Suggested Retail Price or sticker price of the car. If you are just starting your car lease search, then you can find this value on the manufacturer's website.
Base Cap Cost - the base capitalized cost is the negotiated price you'd be willing to pay for the car. This value is usually less than the MSRP, unless the car is experiencing extremely high demand and low supply.
Additional Lease Costs - dealer acquisition fees are nearly always included in a lease contract. Other items, such as extended warranties, might also be purchased as part of the overall deal. For example, you might want to purchase an extended warranty for a 48 month lease on a car when the manufacturer is offering a standard 36 month warranty.

Capitalized Cost Reductions

Our next step in calculating the lease payments is to figure out how much capital, or money, you are willing (or required) to put down on the lease. This is known as the capitalized cost reduction. The larger these upfront payments, the lower are the monthly lease payments. Generally, there are two ways to reduce capital:

Down Payments - this is cash, usually in the form of a bank check, which you are willing to put down on the car. Many leases will specify a minimum down payment.
Trade In Allowance - if you own a car, and are willing to trade it in as part of the lease, then you can take that allowance on this line in the calculator.

Lease Terms and Taxes

In this section, you are going to provide some of the lease terms that you've been offered by the car dealership or perhaps have seen in an advertisement.

Residual Value - in case you don't know the residual value of a car, we've provided a calculation based on the lease term or length. If you know the actual residual value, just overwrite the calculated value.
Money Factor - a money factor is the equivalent of an APR on a loan. In fact, if you take the money factor and multiply it by 24, you get the effective interest rate on the lease. Likewise, if you divide the interest rate by 24, you can calculate the money factor.
Lease Term - the lease term is simply the length of the lease, stated in months.
Sales Tax - this is the sales tax charged in your state.

Calculation of Lease Cost

In this section of the car lease spreadsheet, we are going to compute the total of all out-of-pocket payments associated with the lease. This is the total amount of money that needs to be provided as part of the lease.

Depreciation - this is the loss in value of the car over the term of the lease. For a car lease, depreciation is simply the net capitalized cost minus the car's residual value.
Finance or Rent Charge - this is the rent charged on the car over the life of the lease. This considers the car's value, the money factor, and the term of the lease.
Sales Tax on Lease - state sales tax is required on car leases too.
Total Lease Payment - this is all of the money you need to pay as part of the lease. The value includes sales tax, rent charges, depreciation, trade-ins, and down payments.

Calculating Monthly Car Lease Payments

This is the part you've all been waiting for: An estimate of your monthly car lease payments. We're not going to cover this output line-by-line because we've already explained all these concepts. Basically, this section converts the lease costs into monthly payments by dividing those values by the term of the lease.

It's easy enough to print out a copy of these instructions, and refer to them when you're using the car lease calculator spreadsheet. We think it's a great tool that you can use to play "what if" scenarios, to see how changing an assumption affects the monthly payments. Keep in mind this tool is not intended to replace calculators used by dealerships. The intention here is to provide consumers with quality information, so they are better prepared when they negotiate with leasing companies or dealerships.

Online Car Lease Calculators

If you'd rather use an online car lease calculator, we can help there too. In fact, we have a complete line of car loan and lease calculators that you can access for free. Included in that offering is our online car lease calculator, which follows the same format as the above spreadsheet. All of our online tools come complete with instructions too.

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