What goes into an auto lease payment
Three parts:
- Depreciation fee: (capitalised cost − residual value) ÷ term months. You pay for the value drop during your lease.
- Finance charge: (cap cost + residual) × money factor. Interest on the average outstanding balance.
- Sales tax: applied to monthly payment in most US states (some tax the whole lease upfront).
Money factor is APR ÷ 2400. A 6% APR equals 0.0025 money factor.
Fees to watch for
| Fee | Typical range | When |
|---|---|---|
| Acquisition fee | $400-$1,000 | Signing (usually rolled in) |
| Disposition fee | $300-$500 | End of lease if you return car |
| Security deposit | 0-1 month's payment | Signing (refundable) |
| Doc / title / reg | $50-$500 | Signing |
| Excess mileage | $0.15-0.30/mi over limit | End of lease |
FAQ
Should I put money down on a lease?
Minimizing down payment is generally advised — if the car is totaled, your down payment is lost. Roll fees into monthly payment if you can.
Can I buy out the car at the end?
Yes. The residual value in your contract is your buyout price. If the market value is higher (common with used-car shortages), buying and flipping can make sense.