Lease Value Ratio

Lease Value Ratio Defined

Lease Value RatioThe Lease Value Ratio (LVR) is the heart, soul, passion and entire purpose of We wanted to make it easy to evaluate car leases. The  LVR is displayed as a single number percentage, or ratio, which quickly tells you how much car you are getting for your average payment. The lower the LVR, the better the car lease deal.

How To Calculate Your Lease Value Ratio

LVR is calculated as follows:
Average Car Payment  / MSRP
The resulting numerical percentage is usually between 1 and 1.5 percent; however there are exceptions on both sides of the rule. I’ve seen some really amazing car leases where the lease value ratio os below 1.00% and some really lousy car leases where the Lease Value Ration tops 1.50%. So, how do you know by the number a good lease from a bad one? Based on the monthly car lease figures and data we’ve accumulated over the past two years, here is a guide to help you quickly decide.

LVR Lease Value Ratio Guidelines

  • Excellent Lease: 1.10% and Below
  • Good Lease: 1.11% – 1.20%
  • Average Lease: 1.21% – 1.36%
  • Poor Lease: 1.36% and Up

Remember, the lease value ratio is only a number. Each of us lease cars for slightly different personal reasons. There may be certain models of cars that simply don’t look like a good lease on paper, but when you compare them to other cars in their class, perhaps they fair very well.

MSRP $25,000.00
Lease Term 36
Monthly Payment $250.00
Down Payment $2,000.00
  Down Payment Doesn’t Include First Month’s Payment  
Average Car Payment $305.56 Total Cost / Lease Term
Total Cost of Lease $11,000.00 (Monthly Payment x Lease Term) + Down Payment
Lease Value Ratio – LVR 1.22% Average Car Payment / MSRP

The LVR should be used only as a rule of thumb to give you a quick snapshot of whether or not you’re getting a reasonable good car lease payment or not. Below, is a formula that you can paste into your spreadsheet for helping you determine your own Lease Value Ratio.

10 thoughts on “Lease Value Ratio

  1. How does the permitted milage allowance on a lease impact the LVR? Volkwagon lease offers are 10K miles a year while most others are 12K miles a year. How do you deal with that?

    • You asked a good question, John. I have considered making mileage a part of the lease formula, but in interest of keeping things simple, I decided not to. The difference between 10 and 12K is minor and most dealers will work with you on the mileage. If they’re offering you 10K – tell them you insist on 12K for the same price.

    • Since taxes are a fixed variable, they do not impact the LVR. The tax rate is the same weather you buy, lease, pay cash or borrow. So, tax-rate is not part of the LVR calculation. Thank you for your question.



      • The so called inflation of MSRP is consistent from model to model. Even then, one has to recognize the rating is only a starting point. Your point illustrates why I don’t include hybrids in the lease ratings. They would win every time simply because the MSRP is so high.

  2. i love your lvr. its a nice number to have.
    my formula which works well is, get true car price. get MF and RV from dealer or other (, calculate lease paymen again form or other. negotiate that deal with the 3 local best truecar guys. nice thing is you can negotiate by email/distance til u arrive at a deal. however i like your tool to augment this system to evaluate the deal. although you sort of get a sense by using lease caluculator with (gives a number)but more importantly, knowing upfront how much you are paying in relation to invoice and how how good interest rate is.

    • Hi, Jeff:

      Normally with a lease, you don’t have to make a down payment at all. There shouldn’t be any bank and doc fees on top of the agreed-upon lease payment.
      The dealer needs to make the best deal they can, with all fees included in the lease agreement. Of course, there are sales taxes which depending on the state you live in, is either paid up front or added into the monthly payment.

      Hope this answers your question.


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