Lease contracts are written in a language designed to be confusing. Once you know these five terms, you can read any lease offer and spot exactly where the money is — and where a bad deal is hiding.
1. Capitalized cost (the “cap cost”)
This is the price of the car for lease purposes — and yes, it’s negotiable, just like a purchase price. Every dollar knocked off the cap cost lowers your monthly payment. A common trick: a dealer quotes you a “great” monthly payment while quietly leasing the car at full sticker. Always ask what selling price the lease is based on.
2. Residual value
The car’s predicted value at lease end, set by the bank as a percentage of MSRP. You pay for the gap between the cap cost and the residual. A high residual means the car holds its value well — and your payment is lower. This is why some expensive cars lease surprisingly cheap, and why the “cheap” car isn’t always the cheap lease.
3. Money factor
This is the interest rate, disguised as a tiny decimal like 0.00225. Multiply it by 2,400 to get the equivalent APR (0.00225 × 2400 = 5.4%). Two things to know: banks set a “buy rate,” and dealers are often allowed to mark the money factor up and keep the difference. If you don’t ask, you’ll never know you paid it.
4. Mileage allowance
Standard leases come with 7,500, 10,000, 12,000 or 15,000 miles per year. Going over costs roughly 20–30 cents per mile at turn-in. Be honest about your driving: buying extra miles up front is much cheaper than paying overage later. Under-buying miles to get an artificially low payment is one of the oldest tricks in the book.
5. Due at signing
The advertised “$299/month!” usually hides thousands due at signing. When comparing offers, always look at the total cost: (monthly payment × number of payments) + everything due at signing. Two deals with the same monthly payment can differ by thousands once you count the drive-off check.
The easy way
Or skip the homework. Every offer on our Swift Deals page is already negotiated — real cap cost, buy-rate money factor, no games — with the true monthly and drive-off shown up front. Want a different car? Build your own deal and we’ll do the negotiating for you.
