About the Lease Calculator
A lease calculator computes monthly payments for any leased asset from its value, residual or buyout value, money factor, and term. The same structure applies to vehicles, equipment, and commercial machinery.
The formula
Payment = (value − residual)/months + (value + residual) · money factorThe depreciation component covers value lost over the term; the finance component covers the cost of capital. Money factor multiplied by 2,400 gives the equivalent APR.
How to use this calculator
- 1Enter your Asset Value ($). The field starts at
30000, which you can overwrite. - 2Enter your Residual/Buyout Value ($). The field starts at
15000, which you can overwrite. - 3Enter your Money Factor (× 2400 = APR %). The field starts at
0.0025, which you can overwrite. - 4Enter your Lease Term (Months). The field starts at
36, which you can overwrite. - 5Read the result straight away — it recalculates as you type, so there is no button to press. Use Share to copy a link that reopens the page with your exact numbers filled in.
Worked example
| Input | Value |
|---|---|
| Asset Value ($) | 30000 |
| Residual/Buyout Value ($) | 15000 |
| Money Factor (× 2400 = APR %) | 0.0025 |
| Lease Term (Months) | 36 |
Result
Monthly Payment: $529.17
Depreciation Cost: $416.67/mo
Finance Charge: $112.50/mo
Total Lease Cost: $19050.00
Equivalent APR: 6.00%
Those are the values the page loads with, so you can reproduce this result yourself and then change one field at a time to see what drives the outcome.
Understanding your result
Leasing separates use from ownership, which is its central appeal for businesses. Equipment that becomes obsolete quickly, or that is needed only for a project, often makes more sense leased than bought. The trade is that you never build equity and, over a long enough horizon, leasing costs more.
The residual value drives the payment more than anything else. A high residual means little depreciation to charge, so the payment is low — but it also means a high buyout price if you want to keep the asset. Where the residual is set determines whether the lease or the purchase option is the better deal.
Things worth knowing
- Convert the money factor to APR by multiplying by 2,400, then compare against financing the purchase.
- A capital or finance lease appears on the balance sheet; an operating lease may not. The distinction affects accounting treatment.
- Check the end-of-term options: return, buy out at residual, or extend. Terms vary considerably.
- Early termination penalties on equipment leases are often severe.
- For business equipment, compare leasing against buying with a Section 179 deduction, which can change the answer entirely.
Frequently asked questions
How does leasing differ from buying?+
Leasing pays for the use of an asset over a period; buying pays for the asset itself. Leasing has lower monthly cost and no residual value risk, but builds no equity.
What is residual value?+
The projected worth of the asset at lease end, and usually the price at which you can buy it. A higher residual lowers your payment because there is less depreciation to charge.
What is the difference between an operating and a capital lease?+
A capital or finance lease transfers substantially all the risks and rewards of ownership and is capitalised on the balance sheet. An operating lease is treated more like a rental, though accounting standards have converged.
Can I end a lease early?+
Usually only by paying a termination charge, which can be substantial. Some vehicle leases allow transfer to another party, which is often the cheaper exit.