Calculate monthly lease payments or find the effective interest rate. Get detailed lease cost breakdowns and compare different lease terms and structures.
A lease is a contract allowing a party to convey property to another party for a specified time, usually in return for a periodic payment. Leases are commonly used for vehicles, equipment, real estate, and other assets where the lessee wants to use an asset without purchasing it outright.
Our lease calculator helps you determine either the monthly payment (when you know the interest rate) or the effective interest rate (when you know the monthly payment). This is essential for comparing different lease offers and understanding the true cost of leasing.
This can often be negotiated down, similar to purchasing
Higher residual value = lower monthly payments
The portion of value you're paying for during the lease
| Component | Formula | Purpose |
|---|---|---|
| Depreciation Payment | (Asset Value - Residual Value) ÷ Lease Term | Covers asset depreciation |
| Interest Payment | (Asset Value + Residual Value) × Money Factor | Covers financing cost |
| Total Payment | Depreciation Payment + Interest Payment | Your monthly lease payment |
| Lease Type | Description | Best For |
|---|---|---|
| Closed-End Lease | Fixed residual value, no risk of depreciation | Most consumers, predictable costs |
| Open-End Lease | Variable residual, lessee bears depreciation risk | Businesses, high-mileage users |
| Single Payment Lease | Entire lease paid upfront | Cash-rich lessees wanting lower total cost |
Good for business use, frequent vehicle changes, lower maintenance
Better for high-mileage drivers, long-term use, customization needs
| Factor | Typical Range | Impact on Payment |
|---|---|---|
| Lease Term | 24-48 months | Longer term = lower payment |
| Mileage Allowance | 10,000-15,000/year | Higher allowance = higher payment |
| Security Deposit | 0-3 months payment | May reduce money factor |
| Acquisition Fee | $300-$1,000 | Upfront cost, often rolled into payments |
Negotiate the Price: Focus on the capitalized cost (selling price), not just the monthly payment.
Understand the Money Factor: This is your interest rate - negotiate it like you would on a loan.
Know the Residual: Higher residual values mean lower payments but less flexibility.
Consider Total Cost: Factor in down payment, fees, taxes, and end-of-lease costs.
| Use Type | Tax Treatment | Deduction |
|---|---|---|
| Business Use | Lease payments deductible | 100% of business use |
| Personal Use | No deduction | N/A |
| Mixed Use | Partial deduction | Business percentage only |
Acquisition Fee: Administrative fee charged by leasing company ($300-$1,000).
Disposition Fee: Fee for returning vehicle at lease end ($300-$500).
Excess Mileage: Charge for exceeding mileage allowance ($0.15-$0.30 per mile).
Excess Wear: Charges for damage beyond normal wear and tear.
| Factor | Leasing | Financing |
|---|---|---|
| Monthly Payment | Lower | Higher |
| Ownership | No | Yes |
| Mileage Limits | Yes | No |
| Wear Charges | Yes | No |
| Early Termination | Costly | Flexible |
| Warranty Coverage | Usually covered | Varies |