Lease-to-Own Calculator
Calculate the true cost of a rent-to-own agreement including total payments, equity credits, remaining balance, and effective interest rate.
About this calculator
This calculator breaks down what a rent-to-own agreement actually costs compared with buying the property outright, by tracking three separate money flows: the rent you pay every month, the portion of that rent credited toward the eventual purchase price, and an upfront option fee that may or may not itself be creditable. Total credits earned combines the accumulated monthly rent credits over the full lease term with the option fee if you've marked it as creditable, and that figure is subtracted from the purchase price to find the remaining balance you'd still owe if you exercise the purchase option at the end of the term.
The total cost of the arrangement is all rent paid, plus the option fee, plus that remaining balance — which by construction is always at least the purchase price, since the rent premium above market never disappears, it just gets relabeled as "credit." The effective annual rate is a simplified estimate: it treats the entire premium over the purchase price as if it were interest accruing evenly over the lease term (premium divided by price times years), which is a reasonable order-of-magnitude read but not a true amortization schedule the way a mortgage APR would be. A separate, easy-to-miss number is the premium over market rent — how much extra you're paying each month above comparable non-rent-to-own listings, which is often the real cost of the option to buy later, independent of what's technically labeled credit.
Inputs
Results
Total Credits Earned
$21,200.00
≈ 11 gaming PCs
Remaining Balance at Purchase
$228,800.00
≈ 5 Teslas
How to Use This Calculator
- Enter the property purchase price ($) and the agreed monthly rent ($).
- Set the rent credit percentage (the portion of rent that applies toward purchase).
- Enter the lease term in months and the option fee ($) paid upfront.
- Review total rent paid, total credits accumulated, and remaining purchase balance at end of term.
- Compare remaining balance to current market value to assess whether the option is favorable to exercise.
How the result changes with Lease Term (months)
| Lease Term (months) | Total Credits Earned | Remaining Balance at Purchase |
|---|---|---|
| 18 | $13,100.00 | $236,900.00 |
| 27 | $17,150.00 | $232,850.00 |
| 54 | $29,300.00 | $220,700.00 |
| 90 | $45,500.00 | $204,500.00 |
What each input means
- Purchase Price ($)
- Agreed-upon future purchase price of the property or item.
- Monthly Rent ($)
- Total monthly rent payment (typically above market rate).
- Rent Credit (%)
- Percentage of monthly rent credited toward purchase price. Typical range: 15-35%.
- Lease Term (months)
- Duration of the lease-to-own agreement. Commonly 24-60 months.
- Option Fee ($)
- Upfront non-refundable fee for the purchase option. Typically 1-5% of price.
- Option Fee Credited (0 or 1)
- Set to 1 if the option fee is credited toward purchase price, 0 if not.
- Market Rent ($)
- Comparable market rent for similar properties. Used to calculate the rental premium you're paying.
What each result means
- Monthly Rent Credit
- Amount credited toward purchase each month.
- Total Rent Paid
- All rent payments over the lease term.
- Total Credits Earned
- Total amount credited toward purchase (rent credits + option fee if applicable).
- Remaining Balance at Purchase
- Amount still owed if you exercise the purchase option.
- Total Cost (Lease-to-Own)
- Complete cost including all rent, option fee, and remaining balance.
- Premium over Outright Purchase
- Extra cost compared to buying at the agreed price today.
- Effective Annual Rate
- Simplified effective interest rate implied by the lease-to-own premium.
- Equity at Exercise
- Percentage of purchase price covered by accumulated credits.
How this is calculated
Worked example, using the default values
- Identify Input Parameters4 parametersPurchase Price ($) = 250000, Monthly Rent ($) = 1800, Rent Credit (%) = 25, Lease Term (months) = 36 = 7 input(s) provided
- Calculate Total Credits EarnedTotal Credits Earned = totalRentCredits + optionFeeCredit21200 = $21,200
- Calculate Remaining Balance at PurchaseRemaining Balance at Purchase228800 = $228,800
- Calculate Monthly Rent CreditMonthly Rent Credit = monthlyRent * (rentCreditPct / 100)450 = $450
- Calculate Total Rent PaidTotal Rent Paid = monthlyRent * leaseTerm64800 = $64,800
Engine last updated . Checked against 2 independently-derived tests — how we verify calculators. Built by Paul Gunder, a software engineer, not a licensed financial, medical, or legal professional.
Frequently Asked Questions
Why is the total cost of a lease-to-own agreement always at least the purchase price?
Total cost is built as all rent paid over the term, plus the option fee, plus whatever remaining balance is left after subtracting your accumulated credits from the purchase price. Because the credits come out of rent you've already paid (and possibly the option fee), the arithmetic always nets back to at least the purchase price — the premium above market rent doesn't vanish, it's just relabeled as 'credit' toward that same price instead of extra profit for the landlord.
Is the effective annual rate a real APR like a mortgage would show?
No — it's a simplified estimate that treats the entire premium over the purchase price as if it accrued evenly across the lease term, using premium divided by (price times years). A real mortgage APR accounts for compounding and an amortization schedule; this figure is meant as an order-of-magnitude comparison to financing costs, not a precise loan rate.
What's the difference between 'total credits earned' and the premium over market rent?
Total credits earned is the portion of your rent (plus a creditable option fee) that reduces the remaining balance at purchase — it's the number the seller counts toward your eventual price. Premium over market rent, by contrast, is simply your monthly rent minus comparable market rent, multiplied by the lease term — it measures how much extra you're actually paying each month regardless of how it's labeled, and is often the more honest read on what the option to buy later is really costing you.
How does setting the option fee as non-creditable change the numbers?
If optionFeeCreditable is set to 0, the option fee is excluded from total credits earned, so it no longer reduces your remaining balance at purchase — it's simply money spent to hold the option, added on top of the total cost without offsetting the price. That raises both the remaining balance and the total cost compared to marking the same fee as creditable.
Related Calculators
The questions that sit next to this one — chosen by subject, including calculators filed under a different category.
Lease Option Calculator
Rent credit accumulation and purchase price toward option.
Real Estate & PropertyRent vs Buy Calculator
Compare the financial outcomes of renting vs buying a home over time. Accounts for appreciation, investment returns, taxes, and maintenance.
Aviation OperationsAircraft Lease vs Buy Calculator
Compare the total cost of leasing vs purchasing an aircraft. Factor in loan terms, residual value, and usage hours to find the best option.
Commercial Real EstateLease vs Buy Commercial Calculator
Compare the net present cost of leasing versus buying commercial property over a holding period.
Commercial Real EstateCommercial Lease Calculator
Calculate total occupancy cost for a triple net (NNN) commercial lease, including base rent, CAM, taxes, and insurance.
More in Business & Entrepreneurship.