How Car Leases Work
Depreciation: (Cap Cost − Residual) ÷ Term
Finance Charge: (Cap Cost + Residual) × Money Factor
Monthly: Depreciation + Finance Charge + Tax
Frequently Asked Questions
What is a money factor? The money factor is the interest component of a lease. Multiply by 2,400 to convert to an approximate APR. For example, 0.00125 × 2400 = 3% APR.
What is residual value? The predicted value of the car at lease end, expressed as a percentage of MSRP. Higher residual = lower monthly payment.