Financial · Live
Lease Calculator,
payment to the cent.
Enter the asset cost, down payment, residual value, interest rate, and term to see your exact monthly lease payment, plus the full month-by-month amortization schedule, a term comparison table, and a declining balance chart.
Inputs
Configure the lease
Asset
Rate & residual
Term
Uses standard amortization with a balloon payment — the same method applied to equipment and commercial leases. Interest decreases each period as the balance falls.
Monthly lease payment
36-month term
- Total paid
- $35,979.80
- Total interest
- $5,979.70
- Net cap cost
- $45,000.00
- Residual
- $20,000.00
Term comparison
Same asset, different terms
| Term | Monthly | Total paid | Total interest |
|---|---|---|---|
| 24 mo | $1,208.02 | $33,992.48 | $0.00 |
| 36 mo← current | $860.55 | $35,979.80 | $0.00 |
| 48 mo | $687.13 | $37,982.24 | $0.00 |
| 60 mo | $583.32 | $39,999.20 | $0.00 |
| 72 mo | $514.32 | $42,031.04 | $0.00 |
Click any row to switch to that term. Pre-tax; excludes fees and taxes.
Balance chart
Remaining balance over time
Schedule
Month-by-month amortization
| Month | Payment | Interest | Principal | Balance |
|---|---|---|---|---|
| M1 | $860.55 | $225.00 | $635.55 | $44,364.45 |
| M2 | $860.55 | $221.82 | $638.73 | $43,725.72 |
| M3 | $860.55 | $218.63 | $641.92 | $43,083.80 |
| M4 | $860.55 | $215.42 | $645.13 | $42,438.67 |
| M5 | $860.55 | $212.19 | $648.36 | $41,790.31 |
| M6 | $860.55 | $208.95 | $651.60 | $41,138.71 |
| M7 | $860.55 | $205.69 | $654.86 | $40,483.85 |
| M8 | $860.55 | $202.42 | $658.13 | $39,825.72 |
| M9 | $860.55 | $199.13 | $661.42 | $39,164.30 |
| M10 | $860.55 | $195.82 | $664.73 | $38,499.57 |
| M11 | $860.55 | $192.50 | $668.05 | $37,831.52 |
| M12 | $860.55 | $189.16 | $671.39 | $37,160.13 |
| M13 | $860.55 | $185.80 | $674.75 | $36,485.38 |
| M14 | $860.55 | $182.43 | $678.12 | $35,807.26 |
| M15 | $860.55 | $179.04 | $681.51 | $35,125.75 |
| M16 | $860.55 | $175.63 | $684.92 | $34,440.83 |
| M17 | $860.55 | $172.20 | $688.35 | $33,752.48 |
| M18 | $860.55 | $168.76 | $691.79 | $33,060.69 |
| M19 | $860.55 | $165.30 | $695.25 | $32,365.44 |
| M20 | $860.55 | $161.83 | $698.72 | $31,666.72 |
| M21 | $860.55 | $158.33 | $702.22 | $30,964.50 |
| M22 | $860.55 | $154.82 | $705.73 | $30,258.77 |
| M23 | $860.55 | $151.29 | $709.26 | $29,549.51 |
| M24 | $860.55 | $147.75 | $712.80 | $28,836.71 |
| M25 | $860.55 | $144.18 | $716.37 | $28,120.34 |
| M26 | $860.55 | $140.60 | $719.95 | $27,400.39 |
| M27 | $860.55 | $137.00 | $723.55 | $26,676.84 |
| M28 | $860.55 | $133.38 | $727.17 | $25,949.67 |
| M29 | $860.55 | $129.75 | $730.80 | $25,218.87 |
| M30 | $860.55 | $126.09 | $734.46 | $24,484.41 |
| M31 | $860.55 | $122.42 | $738.13 | $23,746.28 |
| M32 | $860.55 | $118.73 | $741.82 | $23,004.46 |
| M33 | $860.55 | $115.02 | $745.53 | $22,258.93 |
| M34 | $860.55 | $111.29 | $749.26 | $21,509.67 |
| M35 | $860.55 | $107.55 | $753.00 | $20,756.67 |
| M36final | $860.45 | $103.78 | $756.67 | $20,000.00 |
Final balance equals the residual / balloon value.
Monthly · 36 mo
$860.55/mo
Total paid
$35,980
Interest
$5,980
Complete guide
How does a lease calculator work?
A lease calculator computes the fixed monthly payment required to use an asset over a specified term, at a stated interest rate, with a defined residual (balloon) value remaining at the end of the lease. It applies the same present- value mathematics used in mortgage and loan amortization — the key difference is the residual value, which acts as a balloon payment that the lessee does not pay during the lease.
This calculator uses standard financial amortization rather than the money-factor shortcut used in automotive leasing. The result is a true declining-interest amortization schedule where the interest portion of each payment decreases as the outstanding balance falls, identical to how banks model equipment and commercial leases.
The lease payment formula
The monthly payment for a lease with a balloon (residual) value is derived from the present-value annuity formula:
PV = asset cost − down payment (net capitalized cost)
RV = asset cost × residual % (residual / balloon)
n = lease term in months
PMT = r × (PV − RV ÷ (1+r)ⁿ) ÷ (1 − (1+r)⁻ⁿ)
When r = 0: PMT = (PV − RV) ÷ n
Worked example. A $50,000 piece of equipment, $5,000 down payment, 40% residual, 6% APR, 36-month term:
PV = 50,000 − 5,000 = $45,000
RV = 50,000 × 0.40 = $20,000
(1+r)ⁿ = 1.005³⁶ = 1.19668
PMT = 0.005 × (45,000 − 20,000÷1.19668) ÷ (1 − 1÷1.19668)
= 0.005 × (45,000 − 16,713) ÷ 0.16436
≈ $860/month
Over 36 months that is $30,960 in payments plus the $5,000 down payment — $35,960 total. The $20,000 residual is returned to the lessor (or purchased at that price if the lease has a buy-out option).
What is the residual value?
The residual value (also called the balloon or guaranteed minimum value) is the agreed-upon worth of the asset at the end of the lease term. It is set at signing based on the expected depreciation of the asset over the lease period.
A higher residual value lowers your monthly payment because you are only financing the depreciation — the gap between the capitalized cost and the residual. A lower residual (the asset depreciates more) means higher monthly payments.
- Technology (servers, computers): residuals of 20–40% over 3 years, reflecting rapid obsolescence.
- Commercial vehicles & trucks: 30–55% depending on mileage limits and make.
- Industrial machinery: 40–60%, depending on utilization and maintenance terms.
- Aircraft: 50–70% for new aircraft on long-term leases, lower for older fleets.
- Medical equipment: 20–40% given rapid technological advancement.
How the amortization schedule works
Unlike the money-factor method used in car leases (which produces a flat, equal interest charge every month), true amortization has a declining interest charge:
- Month 1: Interest = full net cap cost × monthly rate. Principal = payment − interest.
- Month 2: Interest = (net cap cost − month-1 principal) × rate. Slightly lower.
- Final month: Interest is minimal; the remaining principal payment brings the balance exactly to the residual value.
This structure is identical to a mortgage or installment loan with a balloon payment, which is why the same amortization mathematics applies. The balance never drops below the residual value — that amount remains the lessor's security for the asset's future worth.
How the interest rate affects your payment
The interest rate (APR) determines the finance charge on the outstanding balance. For the same asset cost, residual, and term, a higher rate produces a higher monthly payment. The table below shows how monthly payments change for a $50,000 asset with 40% residual on a 36-month lease:
| Annual rate | Monthly payment | Total interest | Total paid |
|---|---|---|---|
| 0% | $694.44 | $0 | $24,999 |
| 3% | $760.36 | $2,373 | $27,373 |
| 5% | $800.39 | $3,814 | $28,814 |
| 6% | $820.95 | $4,554 | $29,554 |
| 8% | $863.07 | $6,070 | $31,070 |
| 10% | $906.64 | $7,639 | $32,639 |
| 12% | $951.58 | $9,257 | $34,257 |
$50,000 asset, $5,000 down payment, 40% residual, 36-month term.
Comparing lease terms: shorter vs. longer
The lease term is one of the most important decisions in structuring a lease. A shorter term means higher monthly payments but lower total interest cost and more flexibility to upgrade the asset sooner. A longer term spreads the cost out but results in higher total interest and ties you to the asset longer.
| Term | Monthly | Total paid | Total interest |
|---|---|---|---|
| 24 mo | $1,003.25 | $24,078 | $4,078 |
| 36 mo | $820.95 | $29,554 | $4,554 |
| 48 mo | $722.41 | $34,676 | $9,676 |
| 60 mo | $665.56 | $39,934 | $14,934 |
| 72 mo | $632.25 | $45,522 | $20,522 |
$50,000 asset, $5,000 down, 40% residual, 6% APR.
Operating leases vs. capital (finance) leases
From an accounting perspective, leases are classified into two types — a distinction that affects how payments appear on financial statements.
- Operating lease: The lessee records a simple monthly expense. No asset or liability appears on the balance sheet (under older accounting rules). Under IFRS 16 and ASC 842 (current rules), operating leases now create a right-of-use asset and lease liability on the lessee's balance sheet.
- Capital (finance) lease: The asset is treated as if purchased on credit. The asset appears on the lessee's balance sheet and depreciates over its useful life; the lease obligation is recorded as a liability. Interest is expensed separately.
The classification depends on criteria such as whether the lease transfers ownership, contains a bargain purchase option, covers most of the asset's useful life, or the present value of payments equals substantially all of the asset's fair value. Always consult your accountant for classification guidance.
Lease vs. buy: which is better?
The lease vs. buy decision depends on cash flow, tax treatment, technology risk, and balance-sheet goals. Key considerations:
- Cash flow. Leasing preserves capital — you pay monthly rather than a large upfront purchase price. For assets that depreciate quickly (technology, vehicles), leasing limits the financial exposure to obsolescence.
- Tax treatment. Lease payments on operating leases are typically 100% deductible as a business expense. Purchased assets must be capitalized and depreciated, though Section 179 and bonus depreciation provisions can accelerate deductions.
- Ownership and residual risk. Buying means you own the asset and bear its residual-value risk. If it depreciates faster than expected, you absorb the loss. Leasing transfers that risk to the lessor (within the agreed residual).
- Flexibility. A lease with a short term lets you upgrade equipment when newer models become available. Owned assets require a separate sale transaction to exit.
For a direct numerical comparison, compare the total cost of the lease (payments + down payment) to the total cost of an equivalent loan for the same asset, accounting for tax deductibility and residual value recovered at the end of each period.
Equipment leasing: common structures
Equipment leasing typically follows one of three commercial structures:
- Fair market value (FMV) lease. The lessee returns the asset at lease-end, or buys it at its then-fair market value. Residuals are set by the lessor based on expected depreciation. This is the most common structure and is modeled by this calculator.
- $1 buyout lease. The lessee pays $1 at lease- end to own the asset outright. Residual is effectively 0%, so payments are higher. This is economically similar to a loan.
- 10% purchase option lease. The lessee can buy the asset for 10% of its original cost at lease-end. Residual is set at 10%, which lowers payments while providing a clear ownership path.
Enter the appropriate residual percentage for your structure in the calculator above to model any of these three scenarios.
Disclaimer
This calculator provides an estimate of the monthly lease payment using standard financial amortization. It does not include acquisition fees, disposition fees, insurance, maintenance reserves, sales tax (which varies by jurisdiction and lease type), or other charges that lessors may include in commercial lease agreements. Always review the full lease agreement and consult a financial or legal advisor before signing.