Calculate monthly lease payments for any asset — equipment, property, or vehicle. Compare leasing versus buying to find the most cost-effective option.
Input the asset value, residual value percentage at end of lease, annual interest rate, and lease term in months.
Add any down payment, upfront fees, and sales tax rate to get a complete cost picture.
See your monthly payment, total lease cost, and side-by-side comparison of the total cost of leasing versus buying the asset.
Almost any business or personal asset can be leased: cars, trucks, equipment, machinery, computers, office furniture, solar panels, aircraft, and commercial real estate. Leasing is particularly common for assets that depreciate quickly or need regular upgrading.
Lease payment = Depreciation fee + Finance fee + Tax. Depreciation fee = (Asset value - Residual value) / Term. Finance fee = (Asset value + Residual value) x Money factor. This formula is the same for all lease types including auto leases.
Residual value is the expected worth of the asset at the end of the lease term. A higher residual value means lower payments — you are only financing the depreciation (the difference between today value and end value). Residual values vary widely by asset type.
Leasing is better when: you need the asset only temporarily, the asset depreciates quickly and you want someone else to bear that risk, cash preservation is critical, you need off-balance-sheet financing, or tax treatment favors leasing (operating lease deductions).
An operating lease (true lease) keeps the asset off your balance sheet — you rent it and return it. A finance lease (capital lease) is more like financing a purchase — the asset appears on your balance sheet and you assume the risks of ownership.
Operating lease payments are typically fully tax-deductible as a business expense. Finance lease interest and depreciation are deductible but structured differently. Consult a tax advisor for your specific situation — lease tax treatment can be complex.
A lease buyout allows you to purchase the leased asset at the end of the lease term for a predetermined residual value. If the market value exceeds the residual, this can be a profitable option — buy at the agreed price and sell at market value.
Key items to review: early termination penalties (often substantial), mileage or usage limits and excess charges, maintenance responsibilities, insurance requirements, the purchase option price and conditions, automatic renewal clauses, and end-of-lease return conditions.
