Lease Calculator
Work out the monthly payment for leasing equipment, machinery, or any other asset. Enter the asset’s value, its residual value at lease-end, the term, and a rate — as an APR or a money factor — to get the payment, total cost, and effective rate.
Depreciation vs. finance charge
💼 Compare equipment financing options
Compare optionsWhat actually makes up a lease payment
A lease payment has two separate pieces bundled together: a depreciation charge, which simply spreads the drop in the asset’s value (its cost minus what it will be worth at lease-end) evenly across the term, and a finance charge, which is the lessor’s profit for letting you use their money instead of your own. A larger residual value shrinks the depreciation charge because you’re financing a smaller value gap; a lower rate shrinks the finance charge. For leasing specifically cars, see our Car Lease Calculator, which adds mileage limits and other auto-specific terms on top of this same math.
How it’s calculated
Net capitalized cost = asset value − upfront payment. Depreciation charge = (net cap cost − residual value) ÷ term in months. Money factor = APR ÷ 2,400 (or APR = money factor × 2,400). Finance charge = (net cap cost + residual value) × money factor. Monthly payment = depreciation charge + finance charge, plus sales tax on that sum. Total lease cost = monthly payment × term + upfront payment. Effective rate is simply the APR being used (or the APR-equivalent of your entered money factor).
Results update as you type and are general estimates, not a lease quote — actual contracts may add acquisition fees, security deposits, or disposition fees not modeled here.
Worked example
A $60,000 asset with a $24,000 residual value, leased over 48 months at a 7% APR (equivalent to a 0.00292 money factor), with a $3,000 upfront payment and 6% sales tax: the depreciation charge is $687.50 a month and the finance charge is $236.25, for a $979.17 total monthly payment after tax. Over the full term that’s a $50,000.40 total lease cost, including $11,340.00 in finance charges.
Common mistakes
- Comparing only the monthly payment between two leases without checking the total cost, term, and residual value behind each one.
- Confusing a money factor with an interest rate directly — a 0.00292 money factor is roughly a 7% APR, not 0.292%.
- Forgetting that sales tax applies to the full monthly payment (depreciation plus finance charge) in most states, not just the depreciation portion.
Where it is used
- Budgeting for equipment, machinery, or office fixture leases before signing a contract.
- Comparing a leasing quote's implied rate against other financing options.
- Deciding how much of an upfront payment actually helps versus just prepaying the same total cost.
Frequently asked questions
What is a money factor and how does it relate to APR?
A money factor is a small decimal (like 0.00292) used instead of an interest rate to express a lease's finance charge — common in equipment and auto leasing. Multiply a money factor by 2,400 to get the equivalent APR, or divide an APR by 2,400 to get the money factor. This calculator's toggle does that conversion for you automatically.
What is residual value and who sets it?
Residual value is the lessor's estimate of what the asset will be worth at the end of the lease term — the higher the residual, the lower your monthly payment, because you're only financing the difference between the asset's value now and its value later. The leasing company sets this figure using depreciation data for that asset type, and it's usually not negotiable.
Why is the finance charge based on the sum of net cap cost and residual, not just the balance owed?
Standard lease-payment math (the same formula used for auto leases) charges interest on the average of the starting and ending values rather than a declining balance, which simplifies the calculation into one flat monthly finance charge instead of an amortization schedule. It's mathematically equivalent to charging interest on the average balance over the term.
Is this the same as the car lease calculator?
The math is the same lease-payment formula, but our Car Lease Calculator adds auto-specific details like mileage overage charges, acquisition fees, and trade-in credits. Use this generic calculator for equipment, machinery, office space fixtures, or any other leased asset; use the car-specific one for vehicle leases.
Does a bigger upfront payment always save money?
It lowers your monthly payment and slightly reduces the finance charge (since it shrinks the net capitalized cost the finance charge is based on), but the total amount you pay over the lease changes only modestly — you're mostly just shifting cash earlier, not eliminating a cost. Compare the total-cost line, not just the monthly payment, before deciding how much to put down.