Lease Calculator
- Updated
- Formula shown
- Free, no sign-up
Results
Monthly payment of $871.91 for 60 payments in advance at 8%.
| Payment | Amount | Interest | Capital repaid | Balance after |
|---|---|---|---|---|
| 1 | $871.91 | $327.52 | $544.39 | $49,455.61 |
| 2 | $871.91 | $323.89 | $548.02 | $48,907.59 |
| 3 | $871.91 | $320.24 | $551.67 | $48,355.92 |
| 4 | $871.91 | $316.56 | $555.35 | $47,800.57 |
| 5 | $871.91 | $312.86 | $559.05 | $47,241.52 |
| 6 | $871.91 | $309.13 | $562.78 | $46,678.74 |
| 7 | $871.91 | $305.38 | $566.53 | $46,112.21 |
| 8 | $871.91 | $301.60 | $570.31 | $45,541.90 |
| 9 | $871.91 | $297.80 | $574.11 | $44,967.79 |
| 10 | $871.91 | $293.97 | $577.94 | $44,389.85 |
| 11 | $871.91 | $290.12 | $581.79 | $43,808.06 |
| 12 | $871.91 | $286.24 | $585.67 | $43,222.40 |
Payments exclude sales tax, insurance and maintenance. Lessors may also charge fees or quote rates differently; compare the payment on your offer.
How to use the lease calculator
- Choose whether you want the payment or the interest rate.
- Enter the asset value (the price the lessor pays) and the residual value expected at the end. Use 0 for a full-payout lease with no residual.
- Enter the interest rate, or the payment you were quoted, plus the term and how often you pay.
- Choose payments in advance (at the start of each period, common for leases) or in arrears (at the end, like a loan).
Lease payment formula
In advance: PMT = arrears payment ÷ (1 + r)
Finance charge = PMT × n + RV − PV
PV is the asset value, RV the residual value, r the interest rate per period (annual rate ÷ payments a year) and n the number of payments. The lessor gets its money back from two sources: your payments and the asset's value at the end. The payment is the level amount whose present value, together with the discounted residual, equals the asset value. Paying in advance means each payment arrives one period sooner, so it is smaller by a factor of (1 + r). To find the rate from a payment, the calculator solves the same equation numerically.
This is a general lease formula. Car leases are usually quoted with a money factor and taxed monthly; for those, use the auto lease calculator.
Worked example
A business leases a $50,000 machine for 60 months at 8% a year, with a $10,000 residual. Paying monthly in advance, the payment is $871.91; in arrears it would be $877.72. Over 60 payments you pay $52,315, so the finance charge is $52,315 + $10,000 − $50,000 = $12,315.
In the first month, the $871.91 payment arrives before any interest builds up, so interest for the month is charged on $50,000 − $871.91: $327.52. The rest, $544.39, reduces the lessor's investment. After the last payment the balance is exactly the $10,000 residual. If a lessor quoted $850 a month in advance on the same terms, the rate built in would be 7.17%.
Monthly payment by rate and residual
$50,000 asset, 60 monthly payments in advance. Residual shown as a share of the asset value.
| Rate | 0% residual | 10% residual | 20% residual | 30% residual |
|---|---|---|---|---|
| 4% | $917.77 | $842.60 | $767.44 | $692.27 |
| 6% | $961.83 | $890.52 | $819.22 | $747.91 |
| 8% | $1,007.11 | $939.51 | $871.91 | $804.31 |
| 10% | $1,053.57 | $989.54 | $925.50 | $861.47 |
| 12% | $1,101.21 | $1,040.59 | $979.98 | $919.36 |
Payment per $1,000 of equipment cost
Monthly, in advance, no residual. Multiply by the cost in thousands: a $25,000 asset is 25 times the figure.
| Rate | 24 months | 36 months | 48 months | 60 months | 72 months |
|---|---|---|---|---|---|
| 6% | $44.10 | $30.27 | $23.37 | $19.24 | $16.49 |
| 8% | $44.93 | $31.13 | $24.25 | $20.14 | $17.42 |
| 10% | $45.76 | $32.00 | $25.15 | $21.07 | $18.37 |
Tips for comparing leases
- Find the rate in every quote. Lessors often quote only a payment. Use the interest-rate mode to compare quotes with each other and with a loan from the loan calculator.
- Match the timing. A quote in advance looks cheaper per payment than the same deal in arrears. Compare like with like.
- Check the end-of-lease terms. A residual you must pay (a balloon or a fixed buyout) works very differently from one the lessor takes back by reselling the asset.
- Ask about extra costs. Documentation fees, insurance, maintenance obligations, tax and early termination charges are not in this payment.
- Leasing vs buying. Accounting and tax treatment of leases depends on the lease type and where you are. Ask an accountant before deciding.
Frequently asked questions
How do you calculate a lease payment?
Find the level payment whose present value, plus the present value of the residual, equals the asset value. For a $50,000 asset with a $10,000 residual at 8% over 60 months, that is $877.72 a month in arrears, or $871.91 in advance.
What is the difference between payments in advance and in arrears?
In advance, each payment is due at the start of the period, so the first is due at signing. In arrears, it is due at the end, like a loan. Advance payments are smaller by a factor of (1 + periodic rate) because the lessor gets the money sooner.
How do I find the interest rate on a lease?
Enter the payment, asset value, residual and term in the interest-rate mode. The calculator solves for the rate that makes the payments and residual worth exactly the asset value. A $850 monthly payment in advance on the example lease implies about 7.17% a year.
What is a residual value on a lease?
The value of the asset at the end of the lease that the lessor expects to recover, by selling it or through a buyout or balloon payment. A higher residual means you pay for less of the asset, so the payment is lower.
What is a lease rate factor?
The payment divided by the equipment cost, often shown per $1,000. At 8% over 60 months with no residual, paid monthly in advance, the payment is $20.14 per $1,000 of cost.