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This is the length of the lease agreement. Typical leasing lengths are 24, 36, 48 and 60 months. However, sometimes lease agreements are for 36, 38 or 40 months (to make the lease payments appear smaller). We recommend that consumers choose a 36-month lease term.

To make leases more attractive to consumers, manufacturers sometimes subsidize or subvent the leases. This means that they are either offering a low-interest rate or they are inflating the residual value of the vehicle. Both methods help in lowering the monthly payment for the consumer.

Known as MSRP. This is the value of the vehicle suggested by the dealer.

The security deposit is usually equal to one monthly payment. Multiple security deposits can sometimes be made to reduce the interest rate and, consequently, the monthly payment.

A portion of every monthly lease payment is used to pay sales tax. However, you pay tax only on the amount of the car’s value you are using. In other words, rather than paying 8 percent sales tax on a $20,000 car (assuming the sales tax in your county is 8%), you pay 8 percent of the $8,000 the car declines in value as you drive it.

This is the leasing company’s prediction of what the car will be worth at the end of the lease. The residual value is also important because it affects your monthly payment. The higher the residual, the lower your monthly payments.

Sometimes called buyout amount, this is the amount of money you have to pay to own the car. The payoff amount might be different from the residual value because of a refunded security deposit.

This stands for Manufacturer’s Suggested Retail Price and is also referred to as “sticker price”. Many dealers will try to base their leases on MSRP or above. However, you can negotiate a lower price to base the lease on. Remember it is only a suggested price.

Also called the money factor or even a lease fee, this is the interest rate you are being charged. It is expressed as a multiplier that can be used to calculate your monthly payments. For example, 7.2 percent interest, when expressed as a money factor, is .0030. To convert a money factor to an interest rate, multiply by 2,400. To convert an interest rate to a money factor, divide by 2,400. (Always use 2,400 regardless of the length of the loan.)

The lessor is the party who is leasing the car to you. Even though the dealership is arranging the lease, the lessor is often a bank or the financial arm of a car manufacturer.

This is the person who has leased the vehicle.

Manufacturers ship cars to dealers with an invoice on the car. This is the price the dealer is expected to pay the manufacturer for the car. Anything price above invoice paid by the consumer is considered dealer profit.

This is money that the manufacturer or dealer offer the consumer to promote the purchase or lease of a vehicle. Automakers use incentives to balance inventory or to clear out excess stock of certain models. Dealerships are also offered incentives by manufacturers for selling a specific amount of units.

This is the number of miles you are allowed to drive over the term of the lease. Often this is stated as the number of miles per year you can drive. You are able to lease a vehicle with your mileage terms. You can do 7500, 10K, 12K or 15K miles annually. So, on a three-year lease at 10K allowable mileage, brings you to a total of 30,000 miles allowed until the end of your lease contract. If the allowable miles are exceeded, there is a charge per mile, and charges vary depending on vehicle make.

Often called the cap cost, this is the negotiated price of the car and all it’s options. This insight is used in calculating your monthly lease payment.

This is the amount by which a vehicle loses its value. In leasing, depreciation is the difference between the new car’s cost and the value of the car at the end of the lease (plus tax, interest and various leasing fees).

This is the amount of money you must pay to begin the lease. Typically, this includes various DMV and leasing fees plus a security deposit. Some people who want to reduce their monthly payments will also make a cap reduction payment. This is cash, paid up front, and it becomes part of the drive-off fees.

This means you want to get out of the lease contract before all your payments have been made. For example, after 24 months on a three-year lease, you might decide you no longer can afford the car, or you don’t want it any longer. You decide to terminate the lease. This may get costly since you are under contract, leasing companies require you to make all the remaining payments and/or pay a penalty. However, we are expert negotiators and we can help with minimizing or eliminate this cost. Such as, finding another consumer to assume your lease. There may also be a chance that you have equity in the vehicle and can sell it to pay off the finance company.

Most lease contracts have a clause which states that the person leasing the car is responsible for the cost of “excess wear and tear” to the vehicle when it is returned. When cars are used, they will eventually show signs that someone has been in them. So, what is considered excessive? Usually, your contract should have the details. But keep in mind that it is important to have the car washed and detailed before you return it. Usually, the dealer will send you a return checklist several months before the maturity date.

If your leased car is stolen or totalled in an accident, there might be a gap between what your insurance company will pay you for the loss and the amount you now must pay to the leasing company. If you take out gap insurance (it is included in some lease contracts), this will cover you for this loss.

This is the length of the lease agreement. Typical leasing lengths are 24, 36, 48 and 60 months. However, sometimes lease agreements are for 36, 38 or 40 months (to make the lease payments appear smaller). We recommend that consumers choose a 36-month lease term.

To make leases more attractive to consumers, manufacturers sometimes subsidize or subvent the leases. This means that they are either offering a low-interest rate or they are inflating the residual value of the vehicle. Both methods help in lowering the monthly payment for the consumer.

Known as MSRP. This is the value of the vehicle suggested by the dealer.

The security deposit is usually equal to one monthly payment. Multiple security deposits can sometimes be made to reduce the interest rate and, consequently, the monthly payment.

A portion of every monthly lease payment is used to pay sales tax. However, you pay tax only on the amount of the car’s value you are using. In other words, rather than paying 8 percent sales tax on a $20,000 car (assuming the sales tax in your county is 8%), you pay 8 percent of the $8,000 the car declines in value as you drive it.

This is the leasing company’s prediction of what the car will be worth at the end of the lease. The residual value is also important because it affects your monthly payment. The higher the residual, the lower your monthly payments.

Sometimes called buyout amount, this is the amount of money you have to pay to own the car. The payoff amount might be different from the residual value because of a refunded security deposit.

This stands for Manufacturer’s Suggested Retail Price and is also referred to as “sticker price”. Many dealers will try to base their leases on MSRP or above. However, you can negotiate a lower price to base the lease on. Remember it is only a suggested price.

Also called the money factor or even a lease fee, this is the interest rate you are being charged. It is expressed as a multiplier that can be used to calculate your monthly payments. For example, 7.2 percent interest, when expressed as a money factor, is .0030. To convert a money factor to an interest rate, multiply by 2,400. To convert an interest rate to a money factor, divide by 2,400. (Always use 2,400 regardless of the length of the loan.)

The lessor is the party who is leasing the car to you. Even though the dealership is arranging the lease, the lessor is often a bank or the financial arm of a car manufacturer.

This is the person who has leased the vehicle.

Manufacturers ship cars to dealers with an invoice on the car. This is the price the dealer is expected to pay the manufacturer for the car. Anything price above invoice paid by the consumer is considered dealer profit.

This is money that the manufacturer or dealer offer the consumer to promote the purchase or lease of a vehicle. Automakers use incentives to balance inventory or to clear out excess stock of certain models. Dealerships are also offered incentives by manufacturers for selling a specific amount of units.

This is the number of miles you are allowed to drive over the term of the lease. Often this is stated as the number of miles per year you can drive. You are able to lease a vehicle with your mileage terms. You can do 7500, 10K, 12K or 15K miles annually. So, on a three-year lease at 10K allowable mileage, brings you to a total of 30,000 miles allowed until the end of your lease contract. If the allowable miles are exceeded, there is a charge per mile, and charges vary depending on vehicle make.

Often called the cap cost, this is the negotiated price of the car and all it’s options. This insight is used in calculating your monthly lease payment.

This is the amount by which a vehicle loses its value. In leasing, depreciation is the difference between the new car’s cost and the value of the car at the end of the lease (plus tax, interest and various leasing fees).

This is the amount of money you must pay to begin the lease. Typically, this includes various DMV and leasing fees plus a security deposit. Some people who want to reduce their monthly payments will also make a cap reduction payment. This is cash, paid up front, and it becomes part of the drive-off fees.

This means you want to get out of the lease contract before all your payments have been made. For example, after 24 months on a three-year lease, you might decide you no longer can afford the car, or you don’t want it any longer. You decide to terminate the lease. This may get costly since you are under contract, leasing companies require you to make all the remaining payments and/or pay a penalty. However, we are expert negotiators and we can help with minimizing or eliminate this cost. Such as, finding another consumer to assume your lease. There may also be a chance that you have equity in the vehicle and can sell it to pay off the finance company.

Most lease contracts have a clause which states that the person leasing the car is responsible for the cost of “excess wear and tear” to the vehicle when it is returned. When cars are used, they will eventually show signs that someone has been in them. So, what is considered excessive? Usually, your contract should have the details. But keep in mind that it is important to have the car washed and detailed before you return it. Usually, the dealer will send you a return checklist several months before the maturity date.

If your leased car is stolen or totalled in an accident, there might be a gap between what your insurance company will pay you for the loss and the amount you now must pay to the leasing company. If you take out gap insurance (it is included in some lease contracts), this will cover you for this loss.