1. What is a California Car Lease?

A car lease in California allows you to drive a vehicle for a fixed period by paying monthly installments that cover depreciation and financing costs, plus applicable taxes. At lease end, you return the vehicle or purchase it at the predetermined residual value.

2. How Lease Calculations Work

The calculator uses these California lease equations:

Where:

• \( Dep \) — Monthly depreciation amount ($)
• \( Fin \) — Monthly finance fee ($)
• \( MP \) — Total monthly payment ($)
• \( CC \) — Capitalized cost (negotiated vehicle price, $)
• \( RV \) — Residual value (end-of-lease value, $)
• \( T \) — Lease term (months)
• \( MF \) — Money factor (lease interest rate as decimal)
• \( Tax \) — Monthly tax amount ($)

3. Understanding Lease Components

Depreciation: The vehicle's value loss during the lease term, divided equally over each month.
Finance Fee: The cost of borrowing, calculated using the money factor.
Tax: California sales tax applied to the monthly payment.

4. Using the Calculator

Tips: Enter all values in USD. Money factor is typically provided by the dealer (e.g., 0.00125 equals ~3% APR). Tax rate varies by California county.

5. Frequently Asked Questions (FAQ)

Q1: How is California lease tax calculated?
A: California taxes the monthly payment at your local sales tax rate (7.25% to 10.25% depending on county).

Q2: What's a good money factor?
A: Competitive rates are generally 0.0010-0.0020 (equivalent to 2.4%-4.8% APR). Lower is better.

Q3: How does residual value affect payments?
A: Higher residual values lower depreciation costs and monthly payments, but increase end-of-lease purchase price.

Q4: Are there mileage limits?
A: Standard California leases typically include 10,000-15,000 miles/year, with overage charges of $0.15-$0.30/mile.

Q5: What fees are not included here?
A: This calculator doesn't account for acquisition fees, disposition fees, or documentation fees which are common in California leases.