Lease Calculator
Solve any lease for its payment, implied interest rate or asset value.
About Lease Calculator
A lease is a contract where you pay for the right to use an asset over a term, with a residual (buyout) value at the end. The lease payment must recover the difference between the asset's starting value and its residual, plus the time-value cost of the lessor's capital. This calculator solves the three-variable relationship: given any two of payment, rate, and asset value (plus residual and term), it finds the third. The 'advance payment' option models leases where payments are due at the beginning of each period — common for auto and commercial equipment leases.
Formula
Lease payment (ordinary annuity with residual)
Payment = (PV − Residual × discount factor) × rate / annuity factor
- PV
- Asset present value (cap cost)
- RV
- Residual value
- r
- Monthly rate (APR / 12)
- n
- Term in months
Worked example
With the default values below, Lease Calculator returns Monthly Payment of $339.99. Change any input above and every figure here is recalculated in your browser.
Inputs used
- Solve Forone of Monthly Payment, Implied Interest Rate, Asset / Present Value
- Monthly Payment
- Asset Value (Capitalized Cost)minimum 0 $
- 25,000 $
- Residual / Buyout Valueminimum 0 $
- 10,000 $
- Annual Interest Rateaccepts 0–100 %
- 6 %
- Lease Term (months)accepts 1–600
- 60
- Monthly Paymentminimum 0 $
- 300 $
- Payments Dueone of At end of period (ordinary), At start of period (advance)
- At end of period (ordinary)
Results
- Monthly Payment
- $339.99
- Implied Annual Rate
- 6.0000%
- Asset / Present Value
- $25,000.00
- Total Payments
- $20,399.52
- Total Interest / Finance Cost
- $5,399.52
- Residual / Buyout
- $10,000.00
Step by step
- 1Asset / present value= $25,000.00
- 2Residual value= $10,000.00
- 3Monthly payment= $339.99Due at end of each period
- 4Total of payments= $20,399.52
- 5Implied annual rate= 6.0000%
Assumptions and limits
- The result is derived only from the 7 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take inflation or tax into account.
- Figures are rounded for display to 4 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
- This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.
How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.
Frequently Asked Questions
What is the residual value in a lease?
The residual is the agreed-upon value of the asset at the end of the lease term. For auto leases, it's set by the manufacturer's financing arm. For equipment leases, it might be fair market value or a fixed buyout. A higher residual means you're financing less depreciation, so monthly payments are lower.
What's the difference between ordinary and advance lease payments?
An ordinary lease collects payment at the end of each period. An advance lease (also called a 'payment in advance' or 'due at signing' structure) collects at the beginning. Advance payments reduce the outstanding balance sooner, so the payment for the same loan is slightly lower. Most auto leases and some equipment leases require the first payment at signing.
How is this different from the Auto Lease Calculator?
The Auto Lease Calculator uses the dealer-specific money factor and MSRP residual % structure, matching the exact format car dealers use. This Generic Lease Calculator uses the standard financial present value formula, which is more flexible and applies to equipment, real estate, and any other lease where you know the asset value and annual interest rate directly.
Can I use this for commercial property leases?
Yes, with caveats. Enter the lease value (equivalent to the property's present value to the landlord), the monthly rent, the term, and the landlord's required return rate. The implied rate result tells you the landlord's effective yield. Commercial leases often have escalation clauses not modelled here.