Enter the total annual interest rate and the total lease amount into the calculator to determine the monthly interest payments on a lease-to-own.

Lease-to-Own Formula

The following formula is used to calculate the monthly payments on a lease-to-own contract.

MP = L * I /100 / 12

  • Where MP is the monthly interest payment ($)
  • L is the loan amount ($)
  • I is the annual interest rate (%)

Lease-to-Own Definition

What is a lease to own?

A lease-to-own is a financial contract that allows for the purchase of an asset after the time of the lease is up. This contract normally states that the person has the ability but not obligation to purchase the asset at the end of the lease.

This is common in car leases where a person buys the car at the end of the lease. In general, these operate the same way as normal leases and don’t cost any extra.

How to calculate lease-to-own payment?

The following example problem is a step-by-step guide on how to calculate a lease-to-own monthly interest payment.

First, determine the total lease amount. In this example, the total lease amount is $20,000.00

Next, determine the annual interest rate. In this case, the annual interest rate is 5%.

Finally, calculate the monthly interest payments on the lease to own using the formula above:

MP = L * I /100 / 12

MP = 20,000 * 5 /100 / 12

MP = $83.333