What will a lease really cost?

Every quote comes down to the same four numbers. Find them first and ignore everything else.

• Capitalized cost. The price the lease is built on: the negotiated price plus fees, minus any down payment. Lower is better. This is the number you negotiate.
• Residual value. What the lessor expects the car to be worth at the end, as a percent of MSRP. Higher is better, and you cannot negotiate it.
• Money factor. The interest rate. Multiply by 2,400 for the rough APR: 0.00250 is about 6%.
• Term. The length in months, usually 24 to 39.

Then look at the drive-off: first payment, acquisition fee, dealer and broker fees, registration and DMV fees, taxes and any down payment. Two quotes with the same monthly payment can differ by thousands here.

Payment is depreciation (price minus residual, over the months) plus a finance charge ((price + residual) × money factor). In California, tax is generally charged on the monthly payment, not the whole car.

1. The price. Negotiate it as if you were buying. Every dollar off the capitalized cost comes straight off the payment.
2. The money factor. Ask what the base rate is. Dealers can mark it up, so compare it with the rate the lessor publishes for your credit tier.
3. The extras. Dealer add-ons and paint or fabric packages get rolled into the capitalized cost. Ask for them to be itemized, then decline what you do not want.
4. The drive-off. Put as little down as you can. A down payment on a lease is gone if the car is totaled.

Comparing offers? Line up payment, drive-off, term, miles and fees side by side. A lower payment can hide a bigger drive-off.

Buy the miles you will drive, plus a little room. Most deals on this site include 7,500 miles a year, and 10,000, 12,000 or 15,000 are common upgrades. Go over and the contract bills you per mile at the end. Miles bought up front are cheaper, so if you are close to the line, pick the higher allowance.

You can return the car, buy it for the price in your contract, or turn it in and lease another. Ending a lease early can cost more than finishing it, so get the early termination terms before you sign.

Checklist, 90 days out

1. Check the end date and the odometer against your allowance.
2. Ask the lessor for a pre-return inspection. It shows wear charges before you hand the car back.
3. Fix tires, glass and dents if the repair costs less than the charge.
4. Gather both keys, the manuals and service records.
5. Decide: return, buy or lease again. Start that conversation early.

Usually higher coverage limits than you would carry on a car you own. The lessor sets the minimums, so ask for them before you sign. Ask whether gap coverage is included. It covers the difference between what the car is worth and what you owe if it is totaled or stolen. Keep up with service, because the car has to come back in good shape.

• Comparing monthly payments and ignoring the drive-off.
• Guessing low on mileage and paying the overage at the end.
• Skipping the price negotiation because the payment looked fine.
• Missing fees: acquisition at the start, disposition at the end.
• Planning the lease end in the last week.

Questions? FAQ or current deals.