Lease payment calculator
Monthly lease payment with a residual value.
Fill in the fields and the result will appear here automatically.
The model combines repayment of value above the residual with a financing charge. An advance reduces the financed amount, while the residual leaves part of the original price until the end. The charge uses the average of financed and residual values. This teaching convention does not establish the contract’s true annual cost or a right to buy the asset.
How it works
Formula and logic
Financed F = price − advance; residual R = price × residual percentage/100. Monthly depreciation = (F−R)/n; financing charge = (F+R)×r/2400. Payment is their sum. Total excluding buyout = advance + n×payment; R is omitted. Require 0 ≤ R ≤ F. At R = F, depreciation is zero but financing can remain positive. Rate/2400 is this model’s assumption, not a universal contractual money-factor-to-APR conversion.
Example
Price 2,000,000, advance 400,000, residual 40%, 36 months and rate 12% give depreciation 22,222.22, financing 12,000 and payment 34,222.22. Total excluding buyout is 1,632,000; residual price is 800,000. At price 1,000, zero advance, residual 100%, 12 months and 12%, payment is 10 and total 120, excluding buyout 1,000.
Fields and units
- Asset price — $
- Down payment — $
- Residual share, % — unitless
- Term, months — months
- Calculation rate, % per year — unitless
How to use
- — Enter price and advance in one currency; a blank advance means zero.
- — Set a residual percentage of the original price and a whole number of months.
- — Enter the calculation rate for this formula; check what any advertised rate actually means.
- — Compare depreciation, financing charge and total excluding buyout. Review taxes, insurance and servicing separately.
Method and limitations
- Calculation method
- Formula and logic
- Data or methodology source
- Federal Reserve, archived US model: money factor and charge based on value sum
- Limitation
- Simplified average-financing model. Taxes, insurance, servicing, other fees and buyout are excluded; statutory APR and overall contract value are not determined.
FAQ
What does a lease residual leave at the end of the term?
That part of the original price is not depreciated through regular instalments. Return conditions, a purchase option and its actual price belong to the contract; the input does not create a purchase right.
Why does the lease total exclude the buyout?
It adds the advance and regular instalments. For a purchase at the specified residual, add that amount and associated costs separately; returning the asset is a different scenario.
Is the lease calculation rate its complete annual cost?
No. A contractual money factor, interest rate and full-cost disclosure can mean different things. The Federal Reserve source is historical US education, rather than a worldwide contract rule.
Why can residual equal the financed lease amount?
F−R is then zero, so there is no depreciation component. A positive rate still produces a financing charge. Residual above F is rejected because it would imply negative depreciation.