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Equipment lease calculator
Enter the equipment cost, term, an APR-equivalent rate and the residual value the lessor expects. Or type the monthly payment you were quoted and see what the lease costs in total.
How the estimate works
A lease payment covers the equipment's drop in value over the term plus a finance charge. We model it as a loan with a balloon equal to the residual value: you "borrow" the cost, pay it down monthly, and the residual is what is left at the end. Payments due at the start of the month are slightly lower than payments due at the end, because the first one is made before interest accrues.
Worked example
A $100,000 machine leased for 60 months at 9% with a 15% residual ($15,000) comes to about $1,862.99 a month with payments in advance. You would pay $111,779 in payments. If you bought it at the residual, the total would be $126,779.
Know what kind of lease you are signing
A fair-market-value lease usually lets you return the equipment, renew or buy it at its then-current value. A $1 buyout or other fixed low-price purchase option is a different deal that the IRS may treat as a purchase instead of a lease. Read how loans and leases differ and the quote checklist before you sign.
Lessors may quote a "lease rate factor" or a money factor instead of an APR. If you only have a quote, enter the payment above and use this page to see the full cost.
Common questions
What is a residual value?
The residual is the value the lessor expects the equipment to have at the end of the term. A higher residual lowers your payment, but if you want to buy the equipment you may have to pay that amount.
Is a lease payment tax deductible?
If the agreement is a true lease for tax purposes, the IRS says you may deduct the payments as rent. If it is really a purchase, you generally depreciate the equipment instead. See the IRS page linked above and ask a tax professional.