Lease Calculator
Calculate monthly payments for auto and equipment leases, convert money factor to APR, and compare leasing vs buying — in any currency.
Try a worked example
How to Use This Calculator
Tab "Auto Lease"
Enter the vehicle MSRP (sticker price), your negotiated price, the residual value % (set by the lender), the money factor (ask the dealer), lease term, down payment, and any acquisition or dealer fees. The calculator shows your monthly payment broken down into depreciation and finance components, the APR equivalent of the money factor, and total cost of the lease.
Tab "Equipment Lease"
Enter the equipment cost, the lender's annual lease rate, the term in months, and the buyout option as a percentage of original cost (1% for a common "$1 buyout" lease, or 0 for no buyout). The calculator shows monthly payment, total payments, total interest cost, and effective rate using the standard annuity formula.
Tab "Lease vs Buy"
Enter the vehicle or asset price, then fill in both the lease inputs (money factor, residual, down payment, term) and the finance/purchase inputs (down payment, loan rate, loan term). The calculator compares total out-of-pocket cost over the lease period and tells you which option costs less and by how much.
The Formulas
Net Cap Cost = Negotiated Price − Down Payment + Fees
Residual Value = MSRP × (Residual %)
Depreciation Fee = (Net Cap Cost − Residual Value) ÷ Term
Finance Fee = (Net Cap Cost + Residual Value) × Money Factor
Monthly Payment = Depreciation Fee + Finance Fee + Tax
Money Factor to APR:
APR = Money Factor × 2400
Example: 0.00125 × 2400 = 3.0% APR
Equipment Lease — Standard Annuity:
PMT = PV × [r(1+r)^n] ÷ [(1+r)^n − 1]
where PV = equipment cost, r = monthly rate (annual rate ÷ 12), n = term in months
Lease vs Buy — Comparison:
Lease total cost = (Monthly × Term) + Down Payment
Buy payments over lease period = (Monthly × Lease Term) + Down Payment
Savings = Buy cost over period − Lease cost over period
These are standard industry formulas used by automotive lenders and equipment finance companies globally. No country-specific tax data is included — add your local sales or use tax rate in the optional tax field.
Worked Examples
Example 1 — Auto Lease: $40,000 Car
A $40,000 MSRP vehicle negotiated to $38,000, with 55% residual, money factor 0.00125, 36-month term, $2,000 down, $800 fees.
Note: The calculator uses the negotiated price minus down plus fees as net cap cost, matching standard dealer practice. Slight rounding differences from dealer quotes are normal.
Example 2 — Equipment Lease: $50,000 at 8% for 5 Years
A $50,000 piece of manufacturing equipment at 8% annual rate for 60 months.
Example 3 — Lease vs Buy: $40,000 Car
Lease: 36 months, MF 0.00125, 55% residual, $2,000 down. Buy: $4,000 down, 5.5% for 60 months.
Over the full 60-month loan, buying costs $44,160 total but you own the vehicle. Over 36 months, leasing is significantly cheaper in cash outlay — but you own nothing at the end.
Understanding Lease Key Terms
| Term | Definition |
|---|---|
| MSRP | Manufacturer's Suggested Retail Price (sticker price) |
| Cap Cost (Capitalized Cost) | The negotiated selling price of the vehicle |
| Net Cap Cost | Cap cost minus down payment plus acquisition fees |
| Residual Value | Estimated value at lease end, as % of MSRP — set by lender |
| Money Factor | Finance charge expressed as a small decimal (multiply by 2400 for APR) |
| Depreciation Fee | Monthly charge for the vehicle's value lost during the lease |
| Finance Fee | Monthly interest charge on the sum of net cap cost + residual |
| Acquisition Fee | Lender/bank fee for originating the lease (typically $500–$1,000) |
| Disposition Fee | Charged at lease end if you return (not purchase) the vehicle |
| Cap Cost Reduction | Down payment that reduces the net cap cost and lowers payments |
| $1 Buyout Lease | Equipment lease where you can purchase for $1 at end — essentially a finance agreement |
| FMV Lease | Fair Market Value lease — you purchase at market value at end, or return |
Leasing vs Buying: When Does Each Make Sense?
The lease vs buy decision depends on how you use the vehicle or equipment, your cash flow needs, and your long-term goals.
Leasing is typically better when: You want lower monthly payments. You prefer driving a new vehicle every 2–4 years. You stay within mileage limits (typically 10,000–15,000 miles/year). You use the vehicle for business and can deduct lease payments. You don't want to deal with selling or trading in.
Buying is typically better when: You drive high mileage (excess mileage fees add up fast on leases). You plan to keep the vehicle 5+ years — ownership is cheaper long-term. You want to build equity and recoup value by selling. You customize or modify the vehicle. You want no restrictions on use.
For equipment, leasing preserves capital and keeps equipment current. Buying is better for long-lived assets with low obsolescence risk. Many businesses use a mix — lease technology equipment (computers, copiers) that depreciates quickly, and buy heavy equipment that lasts decades.
Money Factor Explained
The money factor is the lease equivalent of an interest rate. It looks like a tiny decimal — typically between 0.00050 and 0.00350 — because it was originally derived by dividing APR by 2400 (24 months × 100 to convert %). To convert in either direction:
Money Factor to APR: APR = MF × 2400
Examples:
0.00050 × 2400 = 1.2% APR
0.00125 × 2400 = 3.0% APR
0.00208 × 2400 = 5.0% APR
0.00292 × 2400 = 7.0% APR
Dealers are required to disclose the money factor if asked. Always ask — and then convert it to APR to compare against a purchase loan rate. A lease with a 0.00125 MF (3% APR equivalent) may be better or worse than a 5.5% purchase loan depending on your down payment, term, and residual value.