A lease payment pays for the depreciation of the asset plus interest on the money tied up in it. A higher residual value means lower payments. Payments in advance (at the start of each month) are standard for most leases.
How to use the Lease Calculator
- Asset value
- Residual given as
- Residual value
- Lease term
- Interest rate
- Payments made
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the asset value, residual value, lease term, interest rate and payment timing.
Tips
- Compare loans by APR and total cost, not just the monthly payment.
- Extra payments go straight to principal and can save a lot of interest.
- Pay off the highest-rate debt first if you want to save the most money.
- Check for prepayment penalties before paying a loan off early.
Common mistakes to avoid
- Stretching a loan term to lower the payment without seeing the extra interest.
- Paying only the minimum on credit cards.
- Forgetting fees that are rolled into the loan.
Inputs explained
| Field | What to enter |
|---|---|
| Asset value | Amount in your currency |
| Residual given as | Choose one: Percentage of value, Amount |
| Residual value | A number |
| Lease term | Units: years, months |
| Interest rate | In % |
| Payments made | Choose one: Beginning of each period, End of each period |
What each result means
- Monthly lease payment = pmt([Interest rate]÷1200, [Lease term], [Asset value], [Residual value], [Payments made])
- Total of lease payments = [Monthly lease payment]×[Lease term]
- Total interest = [Total of lease payments] + [Residual value] – [Asset value]
- Total cost to own (payments + residual buyout) = [Total of lease payments] + [Residual value]
Example values
How the main result changes when Asset value changes and everything else stays at the example values above:
| Asset value | Monthly lease payment |
|---|---|
| 22,500 | 466.62 |
| 33,750 | 699.93 |
| 45,000 | 933.24 |
| 56,250 | 1,166.55 |
| 67,500 | 1,399.86 |
| 90,000 | 1,866.48 |
Formula
Payment = (value − residual ÷ (1 + i)^n) × i ÷ ((1 − (1 + i)^−n) × (1 + i × timing))Total lease cost = payment × nInterest = total payments + residual − valueWorked example
Inputs — Asset value: $45,000; Residual given as: Percentage of value; Residual value: 40; Lease term: 3 years; Interest rate: 7 %; Payments made: Beginning of each period.
Results — Residual value = $18,000.00; Monthly lease payment = $933.24; Total of lease payments = $33,596.56; Total interest = $6,596.56; Total cost to own (payments + residual buyout) = $51,596.56.
Frequently asked questions
How is a lease payment calculated?
It covers depreciation (value − residual) plus interest, spread over the term.
What is a residual value?
The asset's estimated value at the end of the lease.
Is leasing cheaper than buying?
Payments are lower, but you don't build equity.
What formula does the Lease Calculator use?
Payment = (value − residual ÷ (1 + i)^n) × i ÷ ((1 − (1 + i)^−n) × (1 + i × timing)).