Calculate your car lease monthly payment using EU (balloon annuity) or US (money factor) method. Full amortization schedule, APR, total cost, and salary needed.
A car lease calculator estimates your monthly lease payment based on the vehicle's price, residual value, lease term, and interest rate or money factor. It supports both the European balloon-annuity method and the US money-factor method, and can show the total cost and effective APR of the lease.
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Leasing Calculator
The car lease calculator helps you compute the exact monthly payment for financing a vehicle through a lease, whether you are using the European balloon annuity method or the American money factor approach. Enter the vehicle price, down payment, interest rate, lease term, and residual value — the calculator instantly shows your monthly payment, total lease cost, and effective APR.
This tool supports two calculation modes: the EU method (balloon annuity), used by most European leasing companies, and the US method (money factor), the standard at American auto dealerships. Select the method that matches your provider and get a realistic picture of your total costs before signing a contract.
The key inputs you will need are:
Comparison
In Europe, auto leasing is calculated using the balloon annuity method. Banks and leasing companies such as UniCredit Leasing, KBC Leasing, and Porsche Financial Services all use this model. You pay equal monthly instalments over the lease term, and at the end of the contract there is a single large “balloon” payment — the residual value — which you can pay to own the car outright, refinance, or simply return the vehicle. Interest accrues on the outstanding principal balance, which decreases with each payment.
In the United States, the standard is the money factor (MF) method. Instead of an annual interest rate, dealers quote a money factor — a small decimal such as 0.00125. Multiplying the money factor by 2,400 gives the approximate annual percentage rate (0.00125 × 2,400 = 3%). The monthly payment is divided into two components: depreciation (the difference between the cap cost and the residual value, spread over the term) and a finance charge (the sum of cap cost and residual value, multiplied by the money factor).
Which method should you use? If you are working with a European leasing company, choose the EU method. If you are evaluating offers from American dealerships or importing a vehicle from the US, use the US method. Both approaches produce similar results given identical parameters, but their formulas differ and direct comparison requires conversion between the two.
Formula
Your monthly lease payment under the EU method is calculated as a balloon annuity. The financed amount is the difference between the vehicle price and your down payment. The residual value (balloon) is treated as a single lump-sum payment at the end of the term. The formula is:
PMT = (P − RV ⁄ (1+r)^n) × r ⁄ (1 − (1+r)^(−n))
Where P is the financed amount, RV is the residual value, r is the monthly interest rate (annual rate / 12), and n is the number of months. A higher residual value means a lower monthly payment but a larger obligation at the end of the contract.
Under the US method, the payment is broken into:
To lower your monthly payment: increase the down payment, negotiate a higher residual value, extend the lease term, or secure a lower interest rate or money factor. Keep in mind that a longer term reduces the monthly bill but increases total interest paid over the life of the lease.
Total Cost
The total cost of a lease is the sum of all monthly payments over the term plus your down payment. If you plan to purchase the car at the end of the contract, add the residual value as well. Compare this total against the outright purchase price to see the true cost premium of financing through a lease.
Beyond the monthly payments, leases typically carry additional charges: an origination fee (1–3% of the vehicle value), mandatory comprehensive insurance required by nearly all lessors, early termination penalties, and potential excess mileage charges on operating leases (commonly €0.05–0.20 per km over the agreed annual limit).
Advantages of leasing: lower upfront cost, always driving a new vehicle every 3–4 years, full manufacturer warranty coverage during the term, and tax benefits for businesses. Disadvantages: you do not own the vehicle during the contract, restrictions on mileage and modifications, and the total cost over multiple lease cycles is higher than an outright purchase.
The residual value at contract end is a critical parameter. In a financial lease it is fixed in advance, and you have the right to purchase the car at that price. In an operating lease you simply return the vehicle — the right choice if you prefer to swap models regularly without worrying about depreciation risk.
APR
The Annual Percentage Rate (APR) in leasing represents the true cost of financing expressed as an annual percentage of the borrowed amount. Unlike the nominal interest rate, APR captures all fees and charges associated with the contract, making it a far more accurate tool for comparing offers from different providers.
For EU leasing, APR is calculated using the iterative Newton-Raphson method. We search for the discount rate r at which the present value of all cash flows — monthly payments plus the balloon — equals the financed amount. This equation has no closed-form analytical solution and must be solved numerically. Our calculator performs this iteration automatically and displays the exact APR to two decimal places.
For US leasing, a quick approximation exists:
Approximate APR ≈ Money Factor × 2,400
For example, a money factor of 0.00150 corresponds to approximately 3.6% per year. This approximation is accurate enough for comparison purposes but the true APR can differ by 0.1–0.3 percentage points depending on the payment structure. For precise compliance calculations — such as those required under EU consumer credit directives — use the Newton-Raphson iterative method.
Tips
Negotiate the cap cost, not just the payment
Many dealers emphasise the low monthly payment. Always negotiate the vehicle price (cap cost) first — it is the foundation of the entire lease calculation.
Ask for the money factor explicitly
On US-method leases, ask the dealer for the money factor in writing. Multiply by 2,400 and compare with market rates — dealers sometimes mark up the MF.
Residual value depends on the brand
Vehicles with high residual values (Toyota, Lexus, Porsche) produce lower monthly payments at identical terms. Check residual forecasts before choosing a model.
Set a realistic mileage allowance
On operating leases, exceeding the agreed annual mileage triggers significant penalties (€0.05–0.20 per km). Build in a realistic buffer when signing.
Compare with a bank loan
Auto loan rates from banks are often lower than lease rates. If you intend to own the car at the end, a personal loan may be cheaper over the full term.
Include insurance in your budget
Mandatory comprehensive insurance adds 2–5% of the vehicle value per year. Include this in your total monthly cost for an accurate comparison.
A car lease calculator helps you estimate your monthly lease payment and total cost. It uses either the EU balloon annuity method (used by European banks) or the US money factor method (used by American dealerships) to compute an accurate monthly payment, total finance cost, and APR.
The EU balloon annuity method is the standard used by European banks and leasing companies. You finance the car's net value (price minus down payment), and a residual (balloon) value is set at the contract end. Monthly payments cover interest plus principal amortization, with the balloon value remaining unpaid. This typically results in lower monthly payments compared to a standard loan.
The money factor method is used by US dealerships. The monthly payment has two parts: depreciation (how much value the car loses divided by the term) and a finance charge (based on the money factor). The money factor multiplied by 2400 gives the approximate APR. A lower money factor means cheaper financing.
Residual value is the estimated worth of the car at the end of the lease term. A higher residual value means lower monthly payments because you are only financing the depreciation portion. In EU leases it is set as a percentage of the car price; in US leases it is a percentage of MSRP.
The money factor is the financing rate for a US-style car lease. It is similar to an interest rate but expressed as a very small decimal (e.g., 0.00125). Multiply the money factor by 2400 to get the approximate APR. A money factor of 0.00125 is equivalent to about 3% APR.
For EU leases: Monthly payment = Financed amount × [i/(1−(1+i)^−n)] − Residual × [i/((1+i)^n−1)], where i is the monthly interest rate and n is the number of months. For US leases: Monthly payment = Depreciation + Finance charge = (Cap cost net − Residual)/n + (Cap cost net + Residual) × Money factor.
Cap cost (capitalized cost) is the negotiated purchase price of the vehicle used in a US lease calculation. It can differ from the MSRP (sticker price). Reducing the cap cost — by negotiating a lower price or making a cap cost reduction payment — lowers your monthly payment.
Financial advisors generally recommend against large down payments on leases. Unlike a loan, if the leased car is stolen or totaled, you lose any money you put down. It is better to keep cash and let insurance cover replacement. A modest down payment reduces monthly payments, but the risk-adjusted benefit is low.