Leasing – Effective Rate
Converts a leasing contract made up of down payment, installment, term and residual value into the comparable effective rate.
Enter your own numbers and press "Calculate" – or load an example on the right; "Type in" replays it on the device.
A lease offer often looks cheap but is hard to see through. Only the effective rate makes it honestly comparable with a classic car loan.
→ Story & full explanation: What does the lease really cost?
Leasing is financing in disguise: you finance (asset value − down payment), pay monthly installments and the residual value at the end. The calculator finds the rate at which all these payments add up (internal rate of return) – only this effective rate makes leasing comparable with a loan.
Cash-flow IRR: the liquidity advantage as a present value, the residual value as a final payment.