Lease Calculator
Estimate the monthly payment for leasing any asset — equipment, property, or a vehicle — from its value, residual value, term, and interest rate.
Results from this calculator are estimates provided for general informational purposes only, based on formulas, rates, and standards commonly accepted as of 2026. Figures may differ slightly from other calculators or professional sources due to rounding methods, differing assumptions, or regional regulations, and rules may change over time. Always consult a qualified professional — such as a financial advisor, healthcare provider, or other relevant specialist — before making decisions based on these results.
Monthly Lease Payment
$405.06
Summary
Leasing a $20,000 asset with a $8,000 residual value over 36 months at 6% gives a monthly payment of $405.06 — $14,582.28 total, including $2,582.28 in finance charges.
Financed Value
$20,000.00
Total of Payments
$14,582.28
Total Finance Charge
$2,582.28
Total payment breakdown
- Principal: $12,000.00
- Interest: $2,582.28
What is a Lease Calculator?
A lease is a contractual arrangement where the lessee obtains the right to use an asset — a residential space, commercial property, vehicle, or piece of equipment — for a specific term in return for regular rental payments, while the lessor retains ownership throughout. This calculator estimates the monthly payment for leasing any asset from four inputs: its current value, its projected residual value at lease end, the lease term, and the interest rate.
For most assets, the longer the lease period, the lower the residual value — the asset simply has more time to depreciate. Real estate is a notable exception, since it can appreciate rather than depreciate over the lease term. If you're specifically leasing a vehicle, the Auto Lease Calculator adds vehicle-specific details like money factor, sales tax, and trade-in value.
Term Comparison for $20,000.00 Financed Value
Computed for your specific asset value, residual, and rate. Compare how a shorter or longer lease term changes your monthly payment and total cost.
| Term | Monthly Payment | Total of Payments |
|---|---|---|
| 12 mos | $1,072.80 | $12,873.57 |
| 24 mos | $571.85 | $13,724.34 |
| 36 mos (current) | $405.06 | $14,582.28 |
| 48 mos | $321.82 | $15,447.38 |
| 60 mos | $271.99 | $16,319.62 |
| 72 mos | $238.87 | $17,198.98 |
How Is a Lease Payment Calculated?
This calculator prices a lease the same way a loan with a balloon payment is priced: the financed value (asset value minus any down payment) is amortized down to the residual value over the lease term, with interest accruing on the outstanding balance each month, same as a car loan or mortgage. The residual value itself is never paid down — it's returned to the lessor as the asset at lease end.
where i = Monthly Rate, n = Term in Months
Note that "rent" and "lease" are often used loosely, but technically "lease" refers to the contractual agreement itself, while "rent" refers to the periodic payment made under that agreement.
Residual Value Drives the Payment
The residual value — the lessor's estimate of what the asset will be worth at lease end — is the single biggest factor in the payment besides the asset's starting value. A higher residual means you are only paying for a smaller slice of depreciation, which lowers the payment; a lower residual means you're effectively paying for most of the asset's value over the lease.
Leasing Equipment vs. Leasing Real Estate
Equipment leases typically follow the depreciation model above closely, since machinery and vehicles reliably lose value over time. Real estate leases behave differently — commercial and residential leases are usually priced from market rent comparables rather than a depreciation formula, and the "residual value" of a property often exceeds its starting value due to appreciation, which can make a formula-based estimate less reliable for real estate than for depreciating assets.
Operating Lease vs. Finance Lease
An operating lease (the model this calculator assumes) is essentially a long-term rental — the lessee returns the asset at term end. A finance lease (or capital lease) is structured more like a loan, where the lessee is expected to eventually own the asset, often via a small "bargain purchase" option. Finance leases typically carry a much lower or even nominal residual value, since the payments are designed to cover nearly the entire asset value.
Example — Your Current Inputs
Leasing a $20,000 asset with a $8,000 residual value over 36 months at 6% gives a monthly payment of $405.06 — $14,582.28 total, including $2,582.28 in finance charges.
Additional Example — Leasing Office Equipment
A small business leases a $25,000 copier and printer system with a $10,000 residual value over a 48-month term at a 7% rate. Amortizing the $25,000 down to the $10,000 balloon at 7% gives a monthly payment of about $417.53 — $20,041.30 total, including $5,041.30 in interest — versus a materially higher payment if financed as an outright purchase loan for the full $25,000, since the business would then be paying off value it plans to return rather than keep.
About These Parameters
- Asset Value
- The current negotiated value of the asset being leased — the starting point before any down payment is applied.
- Down Payment
- Any upfront cash paid at signing, which directly reduces the value being financed through the lease and therefore both the depreciation and finance charge portions of the payment.
- Residual Value
- The lessor's estimate of the asset's worth at the end of the lease term. Set by the leasing company based on historical depreciation data for similar assets, and generally not negotiable by the lessee.
- Annual Interest Rate
- The lessor's yearly finance rate, applied monthly to the outstanding balance as the financed value amortizes down toward the residual value — the same way interest accrues on a car loan or mortgage.
- Lease Term
- The number of months in the lease. Shorter terms carry a higher monthly payment but less total interest, since less time passes for interest to accrue on the outstanding balance; longer terms lower the payment but accrue more total interest.
Frequently Asked Questions
What's the difference between this and the Auto Lease Calculator?
This calculator applies to any leased asset using a plain annual interest rate. The Auto Lease Calculator adds vehicle-specific details — money factor terminology, sales tax on each payment, and trade-in value — since those are standard parts of how car dealerships structure and disclose lease terms.
Who sets the residual value?
The leasing company (lessor) sets the residual value based on historical depreciation data for that specific asset type, not the lessee. It is typically fixed at the start of the lease and does not change even if the asset's actual market value moves differently than predicted.
Can I buy the asset at the end of the lease?
Many operating leases include a purchase option at or near the residual value. Whether that's a good deal depends on the asset's actual market value at lease end compared to the built-in residual — check current market pricing before deciding to exercise a buyout option.
Is leasing always cheaper than buying?
Monthly payments are usually lower because you only pay for the asset's depreciation rather than its full value. But leasing builds no ownership equity, so for assets you intend to keep long-term, buying (or financing a full purchase) is typically cheaper over the asset's full useful life.