Equipment Lease Calculator
Work out a monthly equipment lease payment from price, term, rate and residual, with the lease rate factor, total cost and the implied rate of a quote. Choose fair market value or a $1 buyout, payments in advance or arrears. Quotes vary by lender.
Your numbers
The price the lessor pays for the equipment, before any down payment. Add delivery or installation if they are financed.
Paid at signing, on top of any first payment. It comes off the amount financed.
A nominal yearly rate, divided by 12 for each month.
What the lessor expects the equipment to be worth at the end. On a fair market value lease the real buyout is set then, so this is an estimate.
Check your quote: paying a month earlier makes each payment a little lower.
Monthly payment
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The calculation runs in your browser and ParrotNotes does not store your numbers. They sit in the page address so you can bookmark or share the result.
How the payment is worked out
A lease pays the lessor back two ways: the monthly payments and the residual at the end. So the payments only have to cover the amount financed less what the residual is worth today, the same as a loan with a balloon payment. With r the annual rate ÷ 12 and v = 1 ÷ (1 + r)^months: payment in arrears = (financed − residual × v) × r ÷ (1 − v). Payments in advance are made a month sooner, so each one is smaller by a factor of (1 + r).
Worked example: a $50,000 machine, $5,000 down, 48 months at 8% with a 10% residual ($5,000). In arrears that is $1,009.85 a month; in advance, $1,003.16, and $6,003.16 is due at signing with the first payment. The 48 payments come to $48,151.80. If you hand the machine back you have paid $53,151.80; if you keep it at the residual, $58,151.80, or $8,151.80 more than the price.
To check the method against a published example: the University of Washington's FIN 350 course leases a $25,000 item over 48 months at 9% with a $12,000 residual, first payment a month later, and gets $413.51 a month. This page returns the same.
Residual: FMV, a set amount or $1
A fair market value lease has a residual, an amount left at the end, and that is what lowers the payment. GreatAmerica, a lessor, puts it this way: the structure is for using the equipment during the term, not owning it. The real end-of-term price on an FMV lease is the market value at that time, so the residual here is an estimate. Pathward describes the $1 buyout as working like a loan used to buy the equipment: fixed, higher payments, then you own it for $1. Some lessors also offer a 10% purchase option: pick the percent mode and type 10.
From a quoted payment to the rate
A quote often gives only the payment or a rate factor. The rate mode searches for the annual rate at which the payments plus the residual are worth exactly the amount financed. Change the residual or the timing and see how far the rate moves: the same $1,000 a month is a different deal if the first payment is due at signing. The rate is nominal, the monthly rate × 12, with the effective yearly rate beside it. Fees, insurance and any tax on the payments are not in it, so the real cost of a quote with fees is higher than the page shows.
How this differs from the lease vs buy calculator
This page gives the payment, or the rate behind a payment. The lease vs buy calculator takes a payment as an input and answers the next question: over the same period, does leasing or buying cost less, once the loan balance and the resale value are counted? Start here to check the quote, then go there for the decision.
What this calculator leaves out
Quotes vary by lender, by your credit and by the equipment, and they can carry documentation fees, insurance, and tax on the payments. This is the arithmetic of a level monthly lease from the numbers you type. It does not tell you what rate a lender will offer. Tax treatment is not covered, including whether an agreement counts as a lease or a purchase for tax. Not financial or tax advice: read the contract and ask your accountant.
For equipment sales reps
When a buyer on the shop floor asks what a machine runs a month, price and term are all you need to give a first answer, with the caveat that the finance company sets the rate. Try the term and residual that fit the buyer's budget, and write down what they say they can pay; the rate mode shows whether that payment is realistic before you send the proposal.
Sources, each read on 2026-11-02. Results are arithmetic on your own numbers, not an offer of finance:
- University of Washington, FIN 350: lease payments as an annuity with the residual as a balloon, $413.51 example (pinned in the tests)
- AccountingTools: present value of an annuity due, the ordinary annuity × (1 + r)
- GreatAmerica: rate factor as a multiplier for the monthly payment and not an amortizing rate; $1 buyout; FMV residual (a lessor's own explanation)
- Pathward: FMV lease and $1 buyout lease compared (a lender's own explanation)
- EquipmentLeasing.org: $1, 10% and fair market value purchase options as quoted in the industry
Related: the lease vs buy calculator for the decision, the TCO calculator to compare whole-life costs, and the payback period calculator for how fast the machine pays for itself.
More for equipment sales: Capital equipment sales, Equipment rental sales.
The budget gets named on the shop floor
What the buyer can pay a month, how long they want to run the machine and who signs off all come up in the walkthrough. Record the conversation in ParrotNotes and you get a transcript, a summary and the action items, so the terms you run here are the ones they said.
Get Started FreeRelated tools
- Lease vs Buy CalculatorCompare the total cost of leasing and buying a car or piece of equipment over the same period, including the value left at the end.Open the tool
- TCO CalculatorCompare the total cost of ownership of two or three options over the years you will own them: purchase, running costs, maintenance and resale.Open the tool
- Payback Period CalculatorWork out how many years and months an investment takes to pay for itself from its cost and yearly savings or cash flows, with the discounted payback too.Open the tool