How to use this calculator
- Choose Fixed Rate if you know the lease's interest rate and want the monthly payment, or Fixed Pay if you already know the payment and want the effective rate behind it.
- Enter the asset value — the price being leased (its capitalized cost) — and the residual value, what it's expected to be worth when the lease ends.
- Set the lease term in years and months.
- Enter the interest rate (Fixed Rate mode) or the monthly payment (Fixed Pay mode).
- Review the solved result, the total of all payments, and the amount-financed-vs-interest breakdown. Share the link or export the numbers as CSV.
How it's calculated
A lease payment is an annuity payment with a balloon at the end: instead of amortizing a balance to $0, it amortizes asset value − residual value while leaving the residual value still owed (the asset's expected value when you hand it back). The formula is Payment = (C − R × (1 + r)−n) × r ÷ (1 − (1 + r)−n), where C is the asset value, R is the residual value, r is the monthly rate (annual rate ÷ 1,200), and n is the number of months. At a 0% rate it collapses to straight-line depreciation: (C − R) ÷ n.
Worked example: a $35,000 asset with a $19,000 residual value, a 36-month term, and a 4.5% rate works out to a $547.20 monthly payment — $19,699.23 total, of which $3,699.23 is interest (the finance charge on the $16,000 actually financed).
Fixed Pay mode runs the same formula in reverse: bounded bisection search between 0% and 100% for the annual rate that produces your known payment. If no rate in that range fits — the payment is below what even a 0% lease would charge, or above what a 100% lease would charge — the calculator says so instead of returning a number that doesn't exist.
A money factor isn't a mystery number — it's just an interest rate wearing a decimal disguise. Car dealers often quote lease pricing as a money factor instead of a rate; multiply it by 2,400 to get the annual percentage rate this calculator expects.
Assumptions
- This calculator models the lease payment itself: the annuity-with-balloon math on the asset value, residual value, rate, and term. It doesn't add a down payment (capitalized cost reduction), trade-in, acquisition or disposition fees, a security deposit, or sales tax — all of which show up on a real lease quote, especially for a car.
- No money factor conversion is needed — enter the annual rate directly (see the methodology note above for converting a quoted money factor).
- In Fixed Pay mode, the effective rate is a reverse-engineered number from the payment math alone, not a guarantee that a specific quoted payment uses simple interest the same way — real lease pricing can bundle in fees that make the quoted payment higher than the base rate math alone would suggest.
- Results are for planning and comparison purposes only, not a lease quote or a guarantee of terms you'll actually be offered.
Frequently asked questions
How is a lease payment calculated?
It's an annuity payment with a balloon: the formula amortizes the asset value minus the residual value over the lease term at the monthly rate, while leaving the residual value still owed at the end instead of paying the asset down to $0. At 0% interest it's just straight-line: (asset value − residual value) ÷ months.
What does residual value mean on a lease?
It's the asset's estimated value at the end of the lease — what you'd owe as a lump sum (a balloon payment) if you decided to buy it instead of handing it back. A higher residual value means less of the asset's value is financed through monthly payments, which lowers the payment for the same rate and term.
Can I use this as a car lease calculator?
Yes — a car lease is exactly this math: the car's price (or negotiated capitalized cost) as the asset value, the leasing company's residual value estimate, and the lease term. The one car-specific wrinkle is that dealers often quote the rate as a money factor instead of an APR; multiply the money factor by 2,400 to get the rate to enter here.
Does this work as an equipment lease calculator for a business?
Yes, the payment math doesn't change for equipment — machinery, vehicles, or server hardware all amortize the same way between a capitalized cost and a residual value. What does change for a business is the accounting treatment: an operating lease is expensed as rent, while a capital (finance) lease is recorded as if the asset were purchased. That classification affects your books and taxes, not the payment math this calculator solves for.
Can I use this as a commercial lease calculator for office or retail space?
It works for the base rent math on a commercial space lease, but commercial leases often layer extra costs on top of that base figure that this calculator doesn't model. A gross lease rolls property tax, insurance, and maintenance into one flat rent; a net lease — especially a triple net (NNN) lease, the most common commercial structure — passes those costs through to the tenant separately. Add them to this calculator's payment yourself to get your real total monthly cost.
Is there a buy vs. lease calculator, or does this one cover both?
This calculator only solves the lease side. To use it as a buy vs. lease calculator, run the same asset's price and term through the Loan or Auto Loan calculator to get the buy-side payment and total cost, then compare that total against what this calculator shows for leasing it. There's no universal answer either way — leasing trades a lower monthly payment and no resale hassle for never building equity, while buying trades a higher payment for keeping the asset's value once it's paid off. A lower lease payment isn't automatically the cheaper outcome over time, so compare the totals, not just the monthly numbers.
What's the difference between Fixed Rate and Fixed Pay mode?
Fixed Rate solves forward: you give it the interest rate, and it tells you the monthly payment. Fixed Pay solves backward: you give it a payment you already have (from a lease quote, say), and it tells you the effective annual rate behind that number — useful for comparing a quoted payment against a rate you could get elsewhere.
Why does Fixed Pay mode say no rate fits the payment I entered?
The calculator searches annual rates from 0% to 100% for the one that produces your exact payment. If your payment is lower than what even a 0% lease would charge for that asset value, residual value, and term, no non-negative rate can explain it — double-check the payment, or try Fixed Rate mode instead to see what payment a given rate would actually produce.
What is a money factor, and do I need to convert it?
A money factor is how auto dealers often quote a lease's financing cost instead of an annual percentage rate — it's written as a small decimal (for example, 0.00125) rather than a percentage. Multiply it by 2,400 to get the equivalent annual rate to enter in this calculator's Fixed Rate mode.
Is a lower monthly lease payment always the better deal?
Not necessarily. Stretching the same total financed amount over a longer term lowers the monthly payment without lowering what you pay in total — and can add interest on top. A dealer can also lower the quoted payment by inflating the residual value estimate, which just shifts cost to a bigger buyout if you want to keep the asset. Compare the total of all payments shown here, not just the monthly number, before judging a deal.
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Disclaimer: This calculator provides estimates for educational purposes only and is not financial, tax, or legal advice or an offer of credit. Actual payments depend on your lender, loan terms, taxes, and insurance. Consult a qualified professional before making financial decisions.