Lease cash-flow IRR calculator
Estimate a monthly lease payment and annualized IRR from modeled cash flows, including when insurance and vehicle tax are paid. All amounts are shown in U.S. dollars ($).
How it works
- The calculator divides the annual rate by 12 and estimates the monthly lease payment using the combined guaranteed and non-guaranteed residual value at the end of the term.
- Monthly cash flows include lease payments and the insurance and vehicle-tax amounts collected from the customer.
- Insurance is modeled as a full annual payment at delivery and every 12 months afterward. Vehicle tax is prorated for the first year based on the delivery month, then paid annually.
- It includes the vehicle-price outflow at delivery and the residual-value inflow at the end of the term. The monthly IRR is found by bisection so the cash flows' net present value equals zero, then annualized as
monthly IRR × 12.
The input rate is used to estimate the monthly payment. The cash-flow IRR is calculated separately using the actual modeled timing of insurance and vehicle-tax payments, so it may differ from the input rate.
This is an illustrative cash-flow analysis based on the inputs you provide. It does not represent the accounting treatment or revenue recognition of any particular lease contract.
U.S. guidance: The insurance and vehicle-tax payment timing assumptions come from the Korean version of this calculator. They are modeling assumptions—not U.S. GAAP or U.S. tax rules.
View the lease cash-flow and IRR explanation (PDF)
The diagram labels are in Korean. If the PDF is not displayed, open it in a new tab.
Java, JavaScript, and Python examples
These source files show the payment-timing and IRR implementation. Expand a language to see its code, then click the code to copy it.
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Calculation inputs
Results
Total monthly customer bill = base monthly lease payment + monthly insurance collected + monthly vehicle tax collected. The monthly fee is not added to the customer's bill; it is modeled as a monthly cash outflow when calculating IRR.
Annualized IRR is monthly IRR × 12, matching the convention used by the Korean-language calculator. This is a nominal annualization, not an effective annual rate.
Monthly cash flow
Periods are shown one month apart, starting with the delivery month in the current year. Month 0 is the delivery date; negative amounts are cash outflows and positive amounts are cash inflows. Customer receipts combine the base monthly lease payment with the monthly insurance and vehicle-tax amounts collected.