Car Leasing Center

Monthly lease payments are typically lower than loan payments for the same vehicle, but leasing may be more expensive long-term because you never build equity. If you want a new car every 2-3 years and drive less than 12,000 miles/year, leasing could make sense. If you keep cars for 5+ years, buying is usually cheaper overall.

The money factor (or lease factor) is the interest rate used in leases, expressed differently. To convert to APR, multiply by 2400. A money factor of 0.0025 equals 6% APR. Lower is always better. The money factor is multiplied by the sum of the capitalized cost and residual value to calculate the finance charge.

Yes, you can negotiate the capitalized cost (vehicle price), money factor, acquisition fees, and mileage limits. You generally cannot negotiate the residual value (set by the leasing company). Focus on the total lease cost rather than just the monthly payment, and negotiate the price just like you would when buying.

You will be charged excess mileage fees at the end of your lease, typically $0.15-$0.30 per mile. If you are 5,000 miles over at $0.25/mile, that is $1,250 due at turn-in. Options to avoid this: buy extra miles upfront (usually cheaper), reduce your driving, or consider buying the vehicle at lease end.

Yes, but it can be expensive. Early termination typically requires paying all remaining payments plus fees, which can cost thousands. Cheaper alternatives include: transferring the lease to someone else, doing a lease swap, or trading the car in at a dealership (though you still owe any negative equity).

Residual value is what the leasing company estimates the car will be worth at the end of the lease. It is set at the beginning and used to calculate your payments. Higher residual value means lower lease payments because you are paying for less depreciation. The residual value is also the price you can buy the car for at lease end.

It depends. A down payment (called "cap cost reduction" on a lease) lowers your monthly payments, but if the car is totaled or stolen early on, you could lose that money. Many experts recommend putting little or no money down on a lease and investing the difference instead, since you are not building equity anyway.