Lease Calculator
Calculate monthly lease payments, total costs, and view detailed breakdowns for equipment, vehicle, and property leases. Includes depreciation, interest, and residual value calculations.
The Lease Calculator helps you determine monthly payments and total costs for leasing equipment, vehicles, or property. It uses the standard lease formula that accounts for depreciation, interest, and residual value.
How Lease Payments Are Calculated
Lease payments are calculated using the formula: Monthly Payment = (Depreciation + (Asset Value + Residual Value) × Money Factor) ÷ Lease Term. The money factor is derived from the annual interest rate divided by 2400. This formula accounts for the depreciation of the asset over the lease term and the interest charged on the average value of the asset.
Key Lease Terms
- Asset Value: The initial cost or fair market value of the leased item
- Residual Value: The estimated value of the asset at the end of the lease term
- Depreciation: The difference between asset value and residual value
- Money Factor: The interest rate expressed as a decimal (APR ÷ 2400)
- Lease Term: The duration of the lease agreement in months
Lease vs. Purchase Considerations
Leasing offers advantages such as lower monthly payments, tax benefits, and the ability to upgrade equipment regularly. However, you don't build equity in the asset and may face mileage or usage restrictions. Consider your business needs, cash flow requirements, and long-term plans when deciding between leasing and purchasing.