Lease Calculator
Calculate monthly lease payments and compare total leasing vs buying costs over 5 years.
Lease vs. Buy Comparison
| Year | Lease Paid | Loan Paid | Lease Equity | Buy Equity |
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Calculate the monthly payment for leasing any asset — vehicle, equipment, or otherwise — and compare the total cost of leasing against buying with a loan.
How Lease Calculator Works
The capitalized cost is the asset's value minus your down payment. The monthly depreciation charge is (Capitalized Cost − Residual Value) ÷ Lease Term — essentially the value the asset is expected to lose, spread evenly across the lease. The finance charge is (Capitalized Cost + Residual Value) × Money Factor, which functions like an interest payment on the average balance financed over the lease.
If you enter an annual interest rate instead of a money factor directly, the calculator converts it using Money Factor = Annual Rate ÷ 100 ÷ 24 — the standard conversion used throughout the leasing industry, since a money factor is designed to be multiplied by 2,400 to recover an approximate APR.
The buy comparison estimates financing the same asset with a standard loan at an equivalent rate, then tracks equity: the lessee builds no equity (you never own the asset), while the buyer's equity is the asset's depreciating value minus the shrinking loan balance — which is the key trade-off between leasing and buying.
See It In Action
Who Uses Lease Calculator and Why
- Calculating the monthly payment for leasing equipment, machinery, or another asset from its value, residual, and financing terms.
- Converting a quoted annual interest rate into a money factor to compare a lease offer against an equivalent loan.
- Comparing the total cost of leasing an asset against financing the same purchase with a standard loan.
- Understanding how much equity you would (or wouldn\'t) build under a lease versus a loan over the same term.
Mistakes to Avoid
- Assuming a lower lease payment automatically means leasing is the better deal — leasing builds no ownership equity at all, so the buy comparison\'s equity tracking (the asset\'s depreciating value minus the shrinking loan balance) is essential context, not an afterthought.
- Entering an annual interest rate directly where a money factor is expected — if converting yourself, remember the standard formula is Money Factor = Annual Rate ÷ 100 ÷ 24, not a straight percentage-to-decimal conversion.
- Underestimating how much the residual value affects the payment — a higher residual value assumption lowers the monthly depreciation charge, so two otherwise-identical lease quotes can differ substantially in payment based on this one number alone.
Tips for Best Results
- If you were quoted an annual rate rather than a money factor, let the calculator do the Money Factor = Annual Rate ÷ 100 ÷ 24 conversion for you rather than estimating it by hand.
- Run the buy comparison even if you\'re fairly sure you\'ll lease — seeing the equity a purchase would build over the same term makes the leasing trade-off concrete rather than abstract.
Fixing Common Problems
My lease payment seems high relative to the asset\'s value. — Check the residual value assumption first — a lower residual value means the asset is expected to depreciate more over the lease term, which directly raises the monthly depreciation charge that makes up most of the payment.
Terms Explained
Capitalized cost: The asset\'s value minus your down payment — the base the lease\'s depreciation and finance charges are calculated from.
Money factor: A small decimal used in leasing in place of an interest rate; multiplying it by 2,400 gives an approximate equivalent APR.