Home › Tools › Auto lease calculator
As of Oct. 19, 2026
Next step: put your dealer's written lease worksheet next to this calculator and match its gross cap cost, residual, money factor, term and miles line by line. If a number won't match, the difference is a fee, a markup or a different residual.
The math:
Sources: Fed: rent charge; Regulation M 213.4; TN DOR SUT-43
A best fit for the situation described, not financial advice or a buy/sell recommendation. Partner links never change a pick.
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Checked Oct. 19, 2026 against TN DOR sources. Tennessee taxes a lease on each payment, not on the whole lease up front. A lump sum paid at signing is taxed when it is paid.
“For leases on which the lessee will make periodic (e.g., weekly or monthly) payments, sales tax is to be collected on each lease payment at the time each payment is made.”
TN DOR Sales and Use Tax Manual (June 2025), ch. 4 · source
“Sales tax applies to a lease of tangible personal property on the billing basis of the lease payments, either on the lump sum due at the time of the lease execution or on a monthly/periodical basis, as provided in the lease contract.”
TN DOR SUT-43 · source
The single-article rule applies to a car lease. TN DOR defines a single article as a separate unit, and its example is an automobile. For leases, DOR's own worked example (SUT-43, a $400 × 12-month lease with a 2.25% local rate) taxes every payment at 7% ($336 total), the local rate on the first $1,600 of payments ($36, in payments 1-4), and the 2.75% state single-article tax on payments $1,600.01 to $3,200 ($44, in payments 5-8): $5,216 in all. This calculator follows that example.
“The state sales tax rate of 7.00% applies to all lease payments under the lease contract. With the local option single article sales tax limitation, only the first $1,600 in lease payments are subject to the local option sales tax, at the applicable local tax rate. The state single article sales tax then applies to the remaining lease payments between $1,600.01 and $3,200, at a tax rate of 2.75%.”
TN DOR SUT-43 · source
“If the leased equipment is determined to be a single article, then the tax rate is applied to the lesser of the first $1,600 of the rental flow from a single article or the per unit rental cost of the single article.”
TN DOR Sales and Use Tax Manual (June 2025), ch. 9 · source
“The lease or rental price may include a fixed periodic amount, such as a regular monthly amount, and a variable periodic amount, such as mileage charges. If the lessee is obligated under the agreement to pay both amounts, then the sum of these amounts is subject to tax.”
TN DOR Sales and Use Tax Manual (June 2025), ch. 4 · source
“The Sales Tax shall apply to all leases of tangible personal property delivered to a lessee or rentee in this State, regardless of where the property will be taken or used by the lessee or rentee”
TN DOR Letter Ruling 02-07, quoting Rule 1320-05-01-.32(2) · source
Tax treatment varies by state; this page does not model other states' rules (the 'Other' option applies a flat percentage you enter to each payment).
A $38,000 SUV, $36,500 negotiated, $500 rebate, $2,000 down, 36 months, 62% residual, 0.00215 money factor, $695 acquisition fee added to the lease, $699 doc fee and $37.50 title and plate paid at signing, 2.75% Davidson County local rate (example inputs, not a quote). Open this exact example in the calculator.
| Vehicle MSRP | $38,000.00 |
| Negotiated price | $36,500.00 |
| Acquisition fee (added to the lease) | $695.00 |
| Gross cap cost = 36,500 + 695 | $37,195.00 |
| Cap cost reduction = 2,000 down + 500 rebate | $2,500.00 |
| Adjusted cap cost = gross − reduction | $34,695.00 |
| Residual = 62% × $38,000.00 | $23,560.00 |
| Depreciation fee = ($34,695.00 − $23,560.00) ÷ 36 | $309.31 |
| Rent charge = 0.00215 × ($34,695.00 + $23,560.00) | $125.25 |
| Base payment | $434.56 |
| 7% Tennessee state tax on each payment | $30.42 |
| Total monthly (payment 37 onward not needed: 36 payments) | $464.98 |
| Payment 1 adds 2.75% local tax on the first $1,600 of payments | $11.95 |
| Payment 1 total | $476.93 |
| Due at signing = payment 1 + 2,000 down + 699 doc fee + 37.50 license | $3,213.43 |
| Local tax over the lease (2.75% × $1,600) · single-article (2.75% × $1,600) | $44.00 · $44.00 |
| Total tax over 36 payments | $1,183.12 |
| Total lease cost (down + fees + 36 payments with tax) | $19,563.78 |
| Equivalent APR (money factor × 2,400 = 5.16%) | 5.11% |
Cents are rounded at each step, the way a contract shows them. 7% × $434.56 = $30.42.
Quotes are saved word for word in our source folder with the date read. The Federal Reserve pages describe the lease math; Tennessee tax comes only from TN DOR documents. Dealer-desk facts use Federal Reserve and FTC text; where no official lease-specific figure exists we show none.
Base payment = (adjusted cap cost − residual) ÷ months + money factor × (adjusted cap cost + residual). Add sales tax on the payment. The adjusted cap cost is the price plus any capitalized fees, minus down payment, rebate and trade equity (Federal Reserve, Regulation M).
Multiply the money factor by 2,400 (0.0025 × 2,400 = 6%), and divide an APR by 2,400 to get a money factor. It is a rule of thumb: the Federal Reserve says a money factor is not a lease rate and cannot be converted by moving the decimal point, so this calculator also solves the exact equivalent APR from your payments and residual.
Per payment. TN DOR says sales tax applies on the billing basis of the lease payments: each periodic payment is taxed when paid, and a lump sum paid at signing is taxed when paid. The 7% state rate applies to every payment.
TN DOR treats an automobile as a single article. Local tax applies to only the first $1,600 of lease payments and the 2.75% state single-article tax to payments between $1,600.01 and $3,200. DOR's SUT-43 example spreads these over the first payments; a 2022 DOR flyer says to charge them on the first payment, so check your paperwork.
We could not settle this from TN DOR sources. They tax each periodic payment and a lump sum paid up front but do not address a capitalized cost reduction on a car lease in the text we read. The calculator taxes only the payments.
The lessor. The Federal Reserve calls it the assigned value of the vehicle at lease end, a projection, and notes different lessors can assign different residuals to the same vehicle; more mileage lowers it.
A lender sets a buy rate for your credit and term, and the money factor on a worksheet can be higher. The Federal Reserve notes the money factor typically is not disclosed, and describes optional dealer markup over the buy rate for dealer-arranged auto loans. We found no official lease-specific markup figure.
A charge in most leases for administrative costs such as the credit report and paperwork. It is either paid at signing or added to the gross cap cost (Federal Reserve). If added, it raises the payment and the rent charge.
A fee the lessor may charge when you return the vehicle, to cover cleaning, inspection, transport, auction and similar costs. Not all lessors charge one (Federal Reserve).
Your contract states a per-mile charge for miles over the allowance, which the Federal Reserve says is often 12,000 or 15,000 miles a year. Multiply miles over by the per-mile rate; Tennessee taxes required mileage charges.
Estimates, not financial advice. Taxes, insurance, PMI and fees vary by lender, county and city; confirm with your lender, dealer and state agency before acting.