Result
Effective annual rate
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This calculation is for informational purposes only and does not replace advice from a qualified professional. Formulas and rates may not fit your exact situation — double-check the figures before making decisions.
How it is calculated
Effective rate = (1 + nominal rate ÷ 100 ÷ periods per year)^(periods per year) − 1, times 100%. The same math as a loan's or deposit's effective rate — here applied to a lease markup that accrues on the outstanding financed amount at a given frequency.
Leasing companies more often advertise the nominal rate — it looks lower than the effective rate, especially with frequent compounding. The effective rate gives a more honest picture of the real markup when comparing offers from different lessors.
The calculation only accounts for the compounding effect of the rate itself — it doesn't include extra one-off charges (a deal arrangement fee, insurance), which in a real lease contract can meaningfully add to the actual cost beyond this rate.