Leasing Definitions

Is leasing confusing to you? It definitely can be! Take a look at these definitions below to help out with some of that confusion!

Capitalized cost. In the leasing universe, this is the vehicle price.

Money factor (also known as a lease factor.) The amount of interest charged on a lease with monthly payments.

Unlike interest rates, which are expressed as a percentage of the amount borrowed, the money factor is usually stated as a decimal.

You can calculate the actual interest rate you're paying by multiplying the decimal by 24. So, for example, if you're quoted a money factor of 0.00297, the rate you're paying is 7.13% (0.00297 x 24 = 0.07128).

Residual value. This is the value of the car or truck at the end of the lease.