How to use this calculator
- Enter or choose asset value.
- Enter or choose residual value at the end.
- Enter or choose lease term.
- Enter or choose interest rate (per year).
- Enter or choose payments made.
- The monthly lease payment updates as you type. Use Copy result or Share to keep it.
Method
Payment = (PV − FV × (1 + i)^−n) × i ÷ (1 − (1 + i)^−n), divided by (1 + i) when paid in advance
- PV
- asset value
- FV
- residual value
- i
- monthly rate = annual rate ÷ 12
- n
- number of monthly payments
Worked example
- i = 6% ÷ 12 = 0.005; (1.005)^−36 = 0.835645.
- Value to recover: 30,000 − 12,000 × 0.835645 = 19,972.26.
- Payment in arrears = 19,972.26 × 0.005 ÷ (1 − 0.835645) = 607.59; in advance ÷ 1.005 = $604.57.
Leasing a $30,000 asset with a $12,000 residual over 36 months at 6% costs $604.57 a month, with about $3,765 of interest.
What the result means
The interest figure is the total of payments plus the residual minus the asset value: what the lessor earns for tying up its money. Compare it with the interest on a loan to buy the asset outright.
Assumptions and limits
- Payments are monthly and level, at a fixed rate.
- At the end you return the asset (or buy it) at exactly the residual value.
- Fees, insurance, maintenance and taxes on the payments are not included.
- Car leases quoted with a money factor are covered by the Auto Lease Calculator.
Questions
What does "in advance" mean?
The first payment is due when the lease starts, so each payment covers the month ahead. That makes each payment slightly smaller than paying in arrears at the end of each month.
How does the residual affect the payment?
A higher residual means you use up less of the asset’s value, so the payment falls; you still pay interest on the residual during the lease, though.
Please note: This calculator gives estimates for planning. It is not financial advice, and lenders’ actual terms, fees and rounding may differ.