Understanding the lease calculator
Leasing spreads the cost of using an asset over the term rather than buying it outright, which is why businesses lease equipment and vehicles to preserve capital. A lease payment has two parts: depreciation, covering the drop from the asset's cost to its residual (end-of-term) value, and a finance charge on the money the lessor has tied up, set here by converting the APR to a money factor.
The higher the residual value, the less depreciation is financed and the lower the payment which is why assets that hold value are cheaper to lease. At the end you typically return the asset, though many leases offer a purchase option at the residual price. Compare the total of payments (plus any residual buyout) against buying to judge whether leasing's lower monthly cost is worth giving up ownership.
Results are estimates for education only and are not financial advice.