A car worth $32,000 is leased: $5,000 down payment, $380 monthly installment over 36 months and $16,000 residual value at the end. Customer Greta wants to know the effective rate.
ℹ Liquidity advantage = value − down payment as a present value, residual value as a final payment.
Change any number and press "Calculate" – or use "Type in" on the right to watch it entered.
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.
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.