Calculate your monthly lease payment

Name: Salary Calculator
Brand: Superworks
Rating: 5 (1 reviews)

Plan an asset lease with residual value and money factor. See depreciation portion + finance portion of each monthly payment.

Industry Standard Live Calculation Visual Breakdown

Lease details

Lease = depreciation (asset cost minus residual) + finance charge.

Asset cost

Residual value (end of lease)

Money factor / rate (% p.a.)

Lease term (months)

Monthly lease payment

₹20,417

Monthly lease payment for 36 months

Asset cost₹8.00 L

Residual value₹2.00 L

Rate9% p.a.

Depreciation portion₹16,667

Finance portion₹3,750

Total over lease₹7.35 L

How lease payments are calculated

Each monthly payment has two parts: depreciation (you're paying for the asset's used value) + finance charge (interest on outstanding capital).

01
Depreciation
Asset cost − residual value, spread evenly across all months.
```
dep = (cost − residual) ÷ months
```
02
Finance charge
Interest on the average outstanding capital (which equals cost + residual at midpoint).
```
finance = (cost + residual) × MF
// MF = rate ÷ 2400
```
03
Monthly total
Add depreciation + finance to get your monthly lease payment.
```
monthly = dep + finance
```

FormulaMonthly = (Cost − Residual) ÷ Months + (Cost + Residual) × MoneyFactorMoneyFactor = rate ÷ 2400 (industry convention). E.g. 9% p.a. → MF = 0.00375.

Why we use this formula by default.
Indian payroll convention, statutory references, and the SaaS tooling that runs payroll all converge on this approach. Below are the authoritative sources we cross-checked.

Accounting

ICAI Ind AS 116

Indian Accounting Standard for lease accounting (right-of-use).

Regulator

RBI Leasing Guidelines

Operational lease and capital lease classification norms.

Theory

Investopedia Lease vs Buy

Decision framework for lease vs purchase decisions.

Industry

Tata Capital / SREI

Major Indian equipment and vehicle lease providers.

Strategic

McKinsey CFO Insights

Practitioner guidance on lease vs capex strategy.

Tax Reference

ClearTax Lease Tax

GST and Income Tax treatment of lease payments.

FAQs about lease financing

Lease vs Buy — which is better?

Lease: lower monthly payment, no resale headache, fully tax-deductible as business expense. Buy (loan): you own the asset, higher EMI but can sell it. For 3-5 year asset use, lease often wins.

What is residual value?

The estimated value of the asset at the end of the lease term. Higher residual = lower depreciation portion = lower monthly payment. The lessor takes back the asset at residual value (or sells to you at that price).

What is "money factor"?

The lease-equivalent of interest rate. Conversion: Money Factor = APR ÷ 2400. So 9% APR = 0.00375 MF. Always ask for the MF, not just the rate, to compare leases fairly.

Is lease tax-deductible?

For businesses: yes, the full monthly lease payment is deductible as an operating expense. For individuals: only if used for business purposes (e.g., self-employed using a leased vehicle).

Can I terminate a lease early?

Yes but expensive — early termination usually triggers fees + paying out the remaining contract minus depreciation. Best to negotiate the residual + early-out terms upfront.

What happens at end of lease?

Three options: (a) return the asset, (b) buy it at residual value, (c) extend or sign a new lease. Most lessees return and start fresh — that's the lease's appeal vs loan.

Lease vs Hire Purchase?

Hire purchase: you become owner at the end after paying all installments. Lease: you don't own automatically — must pay residual to buy. HP is loan-like; lease is rental-like.

Does my credit score affect lease terms?

Yes — leasing companies check CIBIL like banks. Higher score → lower MF and lower deposit. Score below 650 may require co-signer or higher security deposit.

Ready for the next step?

Want to manage asset leases for your business?

Superworks helps track employee assets, leased equipment, and recurring deductions — fully tied to payroll.

Book a Demo Get Started for Free

✓No credit card required
✓14-day free trial
✓Setup in 10 minutes

Calculate your monthly lease payment

Lease details

How lease payments are calculated

Depreciation

Finance charge

Monthly total

ICAI Ind AS 116

RBI Leasing Guidelines

Investopedia Lease vs Buy

Tata Capital / SREI

McKinsey CFO Insights

ClearTax Lease Tax

FAQs about lease financing

Related calculators

Leave Encashment Calculator

Lumpsum Calculator

Machinery Loan EMI Calculator

Mutual Fund Calculator

NFT tax Calculator

NPS Calculator

NPV Calculator

Overtime Calculator

Want to manage asset leases for your business?

Experience a new era of workforce management with Superworks