Leasehackr Calculator: Calculating Car Lease Payment

Editorial Note:

Leasehackr Calculator 10/12/2022

Leasing a car is not typically a sound financial decision. However, if you’ve decided that this is the way to go, this article is for you. Here, you’ll find out how leasing works and how to calculate your car lease payment with the help of Leasehackr Calculator.

How Leasing a Car Works

Let’s assume that the car you want to lease costs 60,000 dollars and you need it for three years. The dealer tells you that in three years this car will cost 30,000 dollars. This is its residual value.

The residual value is the cost of a car in dollars at the end of the lease term.

  • Subtract it from the cost of the car: $60,000-$30,000=$30,000. Instead of paying the full price of the car, you’re going to pay $30,000.
  • Divide it by 36 months and add the sales tax (the tax in Ontario is 13%): $30,000 / 36 months * 13% = 941.666…

Thus, you need to pay around $941 per month to use the car. However, the car doesn’t belong to you and you are to bring it back to the dealership at the end of the lease.

Even though the idea is straightforward, in reality, there are a lot of various fees, rebates, and incentives. For example, acquisition fee, disposition fee, dealer fees, manufacturers’ rebates, and others. The dealers use all these things to earn some money because they don’t really make money on new cars. That’s why calculating the actual car lease payment is much more complicated.

How to Estimate the Car Lease Payment with Leasehackr Calculator

Leasehackr calculator is a popular tool for calculating lease payments. On the website, you can also find forums where people share their real deals. Let’s look at one of the actual deals for an Audi and go over each item in the calculator for you to make an educated choice.

Calculate Lease Payment (Screen Capture)

Questions to Keep in Mind

While going through the Leasehackr calculator, keep in mind the following questions:

  1. What happens with your money if the car gets completely destroyed or stolen?
  2. Is it possible to get out of the lease earlier by transferring it to somebody?
  3. What number does the sales tax apply to? For example, in Ontario, the sales tax is 13%. It changes your monthly payment significantly depending on the number it applies to.

Using LeaseHackr Calculator Step by Step

  1. The first item in the calculator is Make.

    Choose the right brand from the drop-down menu.

Leasehackr CalculatorIt is important because Leasehackr calculator pulls different incentives and fees depending on the manufacturer. Each manufacturer has their own sales process and fees associated with it. For example, the acquisition fee for Audi is $895.

Leasehackr Calculator

For Bently, it’s $995. That’s why it’s important to know what manufacturer you’re going with and what fees they have.

  1. Type in the MSRP Price which is a sticker price or suggested manufacturer’s price.


Your residual value will be calculated based on this number. For example, here it is 57%.

Residual Value

  1. Then specify the Selling Price.

    What is very important about the selling price is that you should make sure that this number doesn’t include any incentives.

Selling Price

Sometimes dealers present the price in a very creative way. It was a real-life example when they told the price of the car without mentioning that it already included the tax savings for the trade-in. That’s why it’s important to separate the selling price from the incentives both to calculate the sales tax and to make sure that you’re not counting the incentive twice.

  1. The next section is the Lease Numbers.

Leasehackr Calculator Numbers (Screen Capture)

  • Months is for how long you are going to take the car. With financing, the longer you finance a car, the lower your monthly payment is. This is because you take the same amount of money and break it down into more months. With leasing, the situation is different. If you lease a car for a longer term, then the residual value will go down. That means that you’re actually financing a higher amount of money, which pushes the monthly price up. So, the relationship between the number of months and the monthly payment is not as direct as compared to financing.
  • Miles/Year is for how many miles per year you’re planning to drive the car. The lower miles you have, the higher the residual value is. This means that your monthly payment gets lower. If you’re driving higher miles, the residual value goes down and your monthly payment goes up. This means that you can get a low monthly deal. Remember!!! Each mile you go over the limit will cost you money at the end of the lease.
  • Residual Value is a key data point because you’re actually going to be financing the remaining amount and all calculations are really based on that number. That’s why you should research it properly. It is not usually available on the manufacturers’ websites. That’s why such forums as Leasehackr or Edmunds are good places to see the real deals and actual residual values. When comparing the residual values on forums, make sure that your months and miles or kilometers are the same. If your miles per year are higher, then the residual value will go down because you’re going to drive more.
  • Money Factor is a rather confusing term if seen for the first time. This is a convoluted way of expressing the interest rate.

Money Factor is the financing charge a person will pay on a lease. It is similar to the interest rate paid on a loan, and it is also based on a customer’s credit score. It is commonly depicted as a very small decimal.

What you should do is take the money factor and multiply it by 2400 (MF x 2400 = APR). You’ll get the APR that is easier to understand. For example, MF: .00099×2400=2.38% APR.

The higher the APR is, the more you pay in the interest cost, and the higher your monthly payment is. That is the point where dealers tend to make money by upselling other credits they have. That’s why it’s very important to be attentive here.

  • Multiple Security Deposit (MSD) is a refundable deposit that you’ll get back at the end of the lease.

Multiple Security Deposit (MSD) Program is the sum of money that you pay before leasing a car to protect the leasing company against damage to the car or nonpayment to the lease.

That’s not a down payment. The benefit to you is that your APR gets reduced. For example, the APR is 4.15% but after you add a refundable deposit, the APR becomes 3.07%. So, you’re saving 1.08%: 4.15%-3.07%=1.08%.

Multiple Security Deposit (Screen Capture)


But you’ll have to put $4,050 for that. We wouldn’t pay it, because it’s a refundable deposit, not a down payment.

Leasehackr Calculator (Screen Capture)

Now let’s go back to our questions.

  • What happens if the car gets completely totaled or stolen? Even if you have gap insurance, will you get this deposit back? That depends on the manufacturer, but no single one we looked at gives the deposit back.
  • If you ever want to transfer your lease, will anybody pay you $4,050 to take over the lease? Most likely you are not going to get it back.

As you can see, you can save 1.08% by giving $4,050 to the dealership. However, you could have easily taken that money and invest it somewhere, for example in the stock market. Even with the volatile economy, you’ll probably get 5 to 6 percent. Thus, the risk is not worth the reward at all. You’re not really winning anything. You’re saving a little bit on the APR, but you could make more money with this sum if you have it. Our opinion is that we should go with a zero MSD payment.

  1. Cap Cost Adjustments.

Calculate Lease Car Payment (Screen Capture)


  • There is an option to give a Down Payment. If you do this, you are financing a lesser amount and your monthly payments become lower. Psychologically you like this lower monthly payment. However, let’s turn to our questions again. 1. What happens if the car gets destroyed? Will you get this down payment back? No, you won’t, even if you have gap insurance. 2. If you want to transfer the lease to anybody, will they pay you your down payment back? No, they most definitely won’t do this. Thus, there is no benefit of putting a down payment except saving a little bit on the interest cost. That’s why if you have this money, you’d better invest it somewhere and make sure you don’t lose it in case something happens with the car. OK, we’ll do down payment zero.
  • Tax Incentives. This can be a bit complicated but very important to understand. They give some examples. You get this if you lease from the manufacturer you already have.


You might think that you should subtract the tax incentive from the sales price. But you should understand that the sales tax will apply to the whole number of the selling price despite the fact that you get cash back or something else. So, you need to reduce that incentive by the tax.

  • Untaxed Incentives.

Leasehackr Calculator

These incentives actually reduce the selling price. You don’t only get the rebate but pay a lower sales tax. You need to make sure that you understand the difference between the two kinds of incentives and you know what goes where because your sales price will decrease or increase depending on how the sales tax is applied.

  • Zero Drive-Off. There are fees, taxes, and rebates that you can’t really avoid. If you click on that button, all these things will get roll over into your monthly payment.
  1. Leasehackr Calculator with Fees, Taxes, Rebates.

Leasehackr Calculator (Screen Capture)

  • Acquisition Fee. Leasehackr calculator actually pulls it based on the brand. You really cannot go around not paying this fee. When you see an ad like Zero Percent Down or $300 Per Week or something like that, there’s still fees that you have to pay which are cash out of pocket.
Rebates (Screen Capture)

  • Dealer Fees.

Leasehackr Calculator

This is what you can actually negotiate. If you buy some excessive wear and tear insurance or any upgrades, you can add them here.

  • Government Fees. Usually, they’re untaxed.

Calculate Car Lease Payments

  • Sales Tax. It can be different.
  • Option to Change How the Sales Tax Is Applied.

Calculate Car Lease Payment

This differs by state or province. Most of them just add it to your monthly lease payments. Before you calculate, do your research to see how it works.

  • Post-Sale Rebates. That’s like a check you would get after the sale. It’s not going to reduce the sales price.

Leasehackr Calculator

  1. The Results.

Lease Payment Calculation (Screen Capture)

  • Pre-Tax Monthly Payment is obvious.
  • Monthly Payment with Tax is the number that you get when you add the sales tax.
  • Drive-Off. If you don’t enable Zero Drive-Off in Cap Cost Adjustments, you’ll see the following.

Leasehackr Calculator

You can ask if it’s worth clicking it off. We think yes because you’re not putting anything out of pocket. The downside is that you have a slightly higher monthly payment and increased interest cost. But in this case, if the car gets totaled or stolen, you’re not risking anything. A little bit of extra interest cost is worth the reward of not putting anything out of pocket. You’d better invest this money in the stock market or saving account. It’s better than paying to the dealership.

  • Disposition Fee is what you need to pay when you return the car. Put it in your spreadsheet when you do the calculation.
  • Post-Sale Rebate is the cash you will get. It won’t affect the sales tax.
  • Total Lease Cost. What they do is they multiply the pre-tax monthly payment by your term. Basically, that’s what you’re going to pay when the term is over. This money goes nowhere because you don’t own the car and you return it. Of course, if you would have bought the car, your car would have depreciated anyway. Perhaps if after the term is over the car depreciates more than this total lease cost, the lease is actually a better deal.
  • Leasehackr Score. It is their algorithm to give your score on how good your lease deal is.

Now you know how to use this Leasehackr calculator. Before you even approach the calculator, you have to spend time to make research to find the most accurate numbers possible. If you’re just plugging in crappy numbers, you’re going to get a crappy result that has nothing to do with the real payment.

Leasehackr Calculator: 1% Rule

Now when you’re trying to come up with the monthly payments and you’re trying to figure out if it’s competitive, there’s a rule of 1% in the Leasehackr community.

1% Rule: A concept of dividing the monthly payment by the MSRP sticker price of the car. If the result is very close to 1%, or less, the better the deal.

The rule is if you can pay one percent per month of an MSRP price, that’s a good deal. So, it’s a little benchmark for you.

Ekaterina Redko

I have always wanted to live a full life without stressing out about money. After finishing university, I started work and soon realized that my salary didn’t match the kind of life I wanted. I took a side hustle, hoping it would make me wealthier – it didn’t. I still had to live paycheck to paycheck. Why? I wanted to figure this out and did it.

The truth is that it is not the amount of money that makes you wealthy, but the way you manage it.  My problem was the lack of proper spending habits and discipline with money. I created a  budget and started saving. Budgeting took me a lot of time and effort, but that was worth it.

Now I understand that how much you save is way more important than how much you earn. Saving is one of the core principles of building wealth and achieving financial independence.

With Financial Freedom Guru, I’d like to share my knowledge and experience of managing money and building wealth. I hope that together we’ll manage to pave the way towards Financial Freedom.

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2 years ago

A very good explanation, thank you. My sister and her husband always lease and I had a sister-in-law that did. The biggest catch I can think of really is that #1 you have to pay for premium insurance for full coverage and #2 you have restricted mileage on the car. So if you end up driving it more or farther than planned, you will have added expenses to the lease. It seems like they give you plenty of miles, however, my parents were having health problems and my sister ended up going to their house and taking them to myriads… Read more »

2 years ago

If you go over, but buy out your lease they won’t charge you for the miles. And also when we were over our dealer was going to waive our mileage overage if we leased a new vehicle with them. Ultimately I just didnt like the new models as well and we bought what we had.

2 years ago

I leased a car right out of college and between moving a few times and changing jobs it was way too easy to run up the mileage.
I ended up buying an older vehicle after that, same (ish) monthly payment amount but no mileage limits, cheaper insurance too. Plus actually eventually having a car owned outright without payments!

2 years ago

A lease is such a waste of money. You pay so much every month and then in the end, you have to return the car and then start all over with payments on another car. If you buy, you’re paying that same amount of money and get to keep the car so you’re getting your money’s worth.

2 years ago
Reply to  Mallory

We’ve just started leasing one ~ it’s the best thing ever. We have a brand new car and don’t have to worry about depreciation. My hubby does so many miles a year he’d be getting it serviced every 9 months. No running costs and no worries if it breaks down or needs something major doing like we’ve had with cars we’ve owned!

2 years ago

 I have 840 on my credit score, but after hearing all the pros and cons of leasing payment, I decided to buy a car 

Deci Bel
Deci Bel
2 years ago

In our time it is a good question to think over. I have a friend paying $300 a month for a leased car, but he hasn’t really been able to go anywhere since the start of the pandemic. Basically a total waste of money for him for as long as this lasts.

2 years ago

One of our cars lease is up in july and we are over miles, i was just curious if we turned it in early if we would have to pay a turn in early fee and/or mileage overage fees. we are planning on leasing another car because the buyout is more than the car is worth. just trying to make the best financial decision.

Steven Turner
Steven Turner
2 years ago

Miles is a very important issue to consider. Very often striving to decrease the monthly payment on car lease and underestimate it. you are right in underlining the fact that every extra mile will cost o fortune at the end. I lease at the moment but im goimg to buy as i hardly do any miles

Carina Pol
Carina Pol
2 years ago

Good explanation, than you. I’ve leased for 12 years everything is included with maintenance with the car tax and insurance I’m with ford at the moment and it suits me

2 years ago

My only issue with leasing is you put money into a car and at the end of the lease you have nothing. In my opinion it is best to make payments towards something that becomes yours

2 years ago

I lease a brand new Ford Focus St Line. I could never afford to buy such an expensive car without leasing. At the end of the two years, I just give it back and get a different car. It’s cheaper than getting finance

2 years ago

You will technically be losing money by leasing in general. Paying so much a month for a few years to have nothing at the end of it.

2 years ago

Can you explain please when dealerships multiply the MSRP with the residual percentage, they take the MSRP before or after the taxes?