The Master Lease Payoff Formula
A lease payoff quote is not simply a sum of your remaining monthly payments. Leasing companies use standardized accounting rules to calculate your exact buyout figure:
Calculate your custom payoff numbers using AutoLoanIQ's lease payoff calculator.
Breaking Down Each Payoff Component
- Contract Residual Value: The guaranteed future value of the vehicle established when the lease was executed.
- Remaining Depreciation Payments: The principal portion of your unmade monthly lease payments through the end of the term.
- Unearned Rent Charges (Money Factor Discount): Because you are paying off the lease early, the leasing company subtracts future finance charges (interest) you haven't incurred yet.
- Purchase Option Fee: An administrative fee (typically $150 to $500) written into your original lease agreement.
- State Sales Tax: Applied to the buyout price unless full tax was collected at initial lease signing (state-dependent).
Real Buyout Calculation Example
| Payoff Line Item | Amount |
|---|---|
| Contract Residual Value | $18,000 |
| Remaining Monthly Payments (6 payments @ $350) | +$2,100 |
| Less: Unearned Rent Charge Credit | -$180 |
| Purchase Option Fee | +$350 |
| Estimated State Sales Tax (7%) | +$1,419 |
| Total Official Lease Payoff Quote | $21,689 |
Maturity Payoff vs. Early Payoff
If you wait until the final month of your lease, all monthly payments are complete. Your buyout payoff will simply equal Residual Value + Purchase Option Fee + State Taxes. If you are evaluating a buyout decision, read our guide on should I buy my leased car.
Conversely, returning your lease early without buying it out incurs severe penalties. Learn how turn-in fees work in our article on lease return fees explained.
Financing and Related Tools
If you finance your lease buyout and have bad credit, test interest rate brackets on our subprime auto loan calculator, follow our subprime checklist, or read about BHPH vs subprime options.
If you plan to lower your buyout loan payment in the future, check our refinance calculator or read about refinancing after bankruptcy.
If trading in your lease creates negative equity, calculate your exact deficit with our negative equity calculator, read 6 ways to exit negative equity, check lender LTV limits, or review GAP insurance necessity.
Frequently Asked Questions
Residual Value + Remaining Depreciation − Unearned Rent Charges + Purchase Fee + Sales Tax.
No. Leasing companies subtract future unearned interest when issuing an early payoff quote.
Residual value is the end-of-lease price. A mid-lease quote adds remaining monthly depreciation payments and tax.
In most states, sales tax is added to the buyout total unless tax was paid upfront on full capitalization cost.