Lease Calculator
Solve any lease for its payment, implied interest rate or asset value.
Inputs
The starting value of the leased asset.
What the asset is worth (or buyout price) at lease end. Use 0 for no residual.
Auto and equipment leases commonly require payment in advance.
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
Asset / present value
= $25,000.00
Residual value
= $10,000.00
Monthly payment
= $339.99
Due at end of each period
Total of payments
$339.99 × 60 months
= $20,399.52
Implied annual rate
= 6.0000%
How it works
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
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.