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Equipment Payments

Equipment lease calculator

Work out a monthly equipment lease payment and see what it is actually made of. A lease payment is the depreciation over the term plus a finance charge, and the residual value at the end drives it more than anything. Enter the numbers from your quote and see the payment broken into its two real parts.

§ 01 Your numbers

Change anything. The answer updates as you type.

The capitalized cost: the price the lease is written against, before any cap reduction.
Any cash you put down to lower the financed amount. Zero for a true no-money-down lease.
What the equipment is worth at the end of the lease, as a share of price. A higher residual means less to depreciate and a lower payment.
The finance rate baked into the lease, as an APR. Internally this is the money factor (APR divided by 2,400), which is how lease quotes usually hide the rate.
How long you lease. A longer term spreads the depreciation thinner but charges finance for longer.
Monthly lease payment
$656
  • Depreciation, per month$556
  • Finance charge, per month$100
  • Total of lease payments$23,616
  • Buyout to own at the end (residual)$5,000
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$400 to $1,000 a month is a typical equipment lease. Confirm the residual, the fees, and any usage limits.

What this assumes, and where it could be wrong

Every one of these is a place the number could be off. They are here because you should be able to check our working, not because we are hedging.

A LEASE PAYMENT IS DEPRECIATION PLUS A FINANCE CHARGE, AND THE RESIDUAL DRIVES BOTH.
You pay for what the equipment loses in value over the term (depreciation) plus rent on the money tied up in it (the finance charge). A higher residual means the equipment holds its value, so there is less to depreciate and the payment falls. The residual is the single biggest lever on a lease payment, and it is set by the lessor, not by you

The lease rate is usually hidden as a money factor, not an APR. A money factor of 0.0033 looks harmless until you multiply by 2,400 and see it is roughly an 8% rate. The calculator takes the APR to keep it honest and converts internally, so you can compare a lease rate to a loan rate directly.

At the end you own nothing unless you buy the residual. A lease is renting: you return the equipment, or you pay the residual to keep it. The buyout line shows that number, because a lease that looks cheaper than a loan monthly can cost more once you add the residual to own the thing.

This is a straightforward finance lease. Real lease contracts add acquisition fees, disposition fees, mileage or usage limits, and maintenance terms, none of which are in the payment here. Read the contract for those; they are where a cheap-looking lease gets its money back.

The defaults are ours and are a starting point. The price, residual, rate, and term are yours, and the payment is only as right as the quote they came from.

Frequently asked questions

How is an equipment lease payment calculated?
It is the depreciation (the price minus the residual, divided by the term) plus a finance charge (the money factor times the sum of the price and the residual). The calculator above does both and shows them separately, so you can see that most of the payment is depreciation and the rest is rent on the money.
What is a residual value on a lease?
It is what the equipment is expected to be worth at the end of the lease, set by the lessor. It matters twice: a higher residual lowers your payment because there is less value to depreciate, and it is the price you pay to buy the equipment at the end if you want to keep it. The calculator shows both effects.
What is a money factor?
It is the lease world's way of quoting an interest rate as a small decimal. Multiply it by 2,400 to get the equivalent APR: a money factor of 0.0033 is about 8%. Quotes use it because a tiny decimal looks less like a rate than a percentage does. This calculator takes the APR and converts for you.
Is leasing equipment cheaper than buying?
The monthly lease payment is usually lower than a loan payment, because you are only financing the depreciation, not the whole price. But you own nothing at the end unless you buy the residual, so the honest comparison is total cost to own, not monthly payment. The lease-versus-buy calculator does that comparison.

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