Frequently Asked Questions


I’m new to car leasing. What do I need to know?

I’m new to car leasing. What do I need to know? The best place to start learning about car leasing is at the first page of our free Lease Guide. Although there is a lot of information in the Guide, you don’t need to try to soak it all up at once. Go through it quickly the first time, making mental notes of sections that you want to return to later for a more detailed reading. … Read More

What parts of a lease deal are negotiable?

Primarily, and most importantly, vehicle price should be the focus of your negotiation. This is the only element of the deal that is directly controlled by the dealer. All other elements such as residual, money factor, down payment, security deposit, and acquisition fee are all controlled by the leasing company, for which the dealer is only acting as an agent. Sometimes, though not often, the leasing company gives the dealer authorization to negotiate some of … Read More

Which is better – leasing or buying?

The answer depends on a number of factors that are different for everyone. Your driving “personality”, your vehicle choices, and your financial objectives are important factors. For more details see Lease vs Buy in the Lease Guide and use our Lease vs Buy calculator.

Can I use my current car as trade-in on new lease?

It depends. If your current car is paid for, you can certainly use it as a trade-in. Just be sure you know its fair trade-in value, and that the dealer gives you full credit when your lease payments are calculated. If you still owe on your car, you will want to get the “payoff” from your finance company and compare that amount to the trade-in value of the car. If the trade-in value is higher, you have “trade equity.” If not, you’re … Read More

What is the difference between a down payment and amount due at signing?

This often causes misunderstandings. Lease inception amount (same as “due at signing” or “drive out” cost) includes all charges that require up-front payment in cash, such as taxes, official fees, deposits, first month’s payment, and down payment. Notice that “down payment” (cap cost reduction) is only part of the total “due at signing” amount. The down payment amount is the only part that reduces  capitalized cost (amount financed), which reduces  monthly payment amount.

How do I end my lease early?

As you probably already know, lease contracts are not designed to be easily or inexpensively terminated before the normal end date. However, you do have a number of options available to you that could minimize your costs and headaches. Unfortunately, an adequate discussion of these options would be too lengthy to present here. A full discussion of all your lease termination options, including how to choose the right option for you, is contained in our article, Exit Your Lease Early.

How does sales tax apply for a car lease?

Sales tax laws can be quite different between states and localities. Most states simply apply the local sales tax rate to each monthly lease payment. A few states want all sales tax paid up front, based on the value of the vehicle or the sum of all monthly payments. See Lease Fees and Taxes for more details.

Can someone else drive my leased car?

Most lease contracts specify who is allowed to drive a leased car. Other than the lessee, other drivers may be restricted to a spouse or family member. Lease companies typically require a request for permission for drivers other than those allowed by the contract. The best policy, if in doubt, is to read your contract or contact your lease company. There is no standard way in which this is handled by different lease finance companies.

What if I move to another state with my leased car?

If you move to another state with your leased vehicle, immediately notify your lease company of your move. This is not only to change your billing address and the car’s “garaged” address but, more importantly because sales tax rates may be different between your old location and your new one, the tax portion of your monthly payment may change — up or down. This should only amount to a small change in your total payment, … Read More

What if I am over my lease mileage limit?

It’s important to realize that if you drive lots of miles, you’ll pay for those miles one way or another, whether you lease, buy, or rent. Any vehicle suffers value depreciation for every mile that it is driven. You could consider purchasing your vehicle, which avoids mileage fees but this may not be your best option. For more details see Over Mileage Car Lease. You can track your mileage and determine lease-end mileage costs with … Read More

Can I swap cars during my lease?

No. A car lease is for a specific vehicle which means you can’t simply change vehicles in the beginning, middle or any other time during your lease. It’s not like renting.

Possible to lease a used car?

No. Leasing is restricted to brand new car, not used cars — with the exception that used luxury cars may be available for lease by specialty used car dealers in some larger cities. However, leasing used cars is not recommended due to low residual values and high lease finance rates. Used car leases cannot be evaluated using the calculators on this web site. For more detail, see the article Used Car Leasing. Some used car dealer … Read More

What are my end of lease options?

You have a number of options, including returning, purchasing, and trading. Regardless of which option you may be leaning toward, it may not be your best choice financially. For example, it would not be wise to return a car that is worth more than your lease contract purchase price. Buy it, then sell it and pocket the profit. There are a number of factors you need to look at to make your decision, but It’s … Read More

Where is my interest rate in my lease contract?

Lease contracts aren’t required to show finance rate (lease money factor) or interest directly. However they do show the total of all your monthly finance charges as “Lease Charge” or “Rent Charge.” You can calculate the interest rate very easily as follows: Divide the Lease/Rent Charge by the number of months in your lease. Then divide the resulting number by the sum of Adjusted Cap Cost plus Residual. This is your Money Factor, which can be … Read More

How does a lease show up in my credit report?

A car lease is a debt obligation, like a loan. In fact, leases are often not identified as leases and can look just like loans on the report. Sometimes the amount owed includes the lease residual amount, sometimes not. It depends on the company doing the reporting to the credit bureau.

How can I get residual values before I lease?

You usually can’t. Since leasing companies can set residual values as they see fit, the only way to get the actual residual value being used for a specific car, from a specific dealer, who uses a specific leasing company, is to ask. Some dealers will provide you this information; some will not. We provide estimated average residual values for all new makes/models of vehicles in the Residual Calculator in our Lease Kit so that when you … Read More

How can I get money factors before I lease?

You can’t, unless you ask the dealer from which you plan to lease. You can estimate the money factor by dividing the current local new-car loan interest rate (see by 2400. But each leasing company sets its own factors. And it can be different, depending on the term (length) of the lease — and on your credit rating.  So, you have to ask to get the actual value that will be used by your dealer. … Read More

In the lease formula it looks like I’m paying interest on the sum of cap cost and residual?

Nope. The part of the formula that determines the finance portion of your monthly payment is (Cap Cost + Residual) x Money Factor. It looks like we’re multiplying the sum of Cap Cost and Residual by an interest rate, but Money Factor is not interest rate, although it can be converted to interest rate. The reason Cap Cost and Residual are added is to facilitate the calculation of average amount financed: (Cap Cost + Residual) / … Read More

Can I get a car lease for less than 24 months?

No, not usually. Typical lease terms are set by lease companies at a minimum of 24 months. And because most of a vehicle’s depreciation happens in the first year, a shorter new-car lease would be very expensive. A better solution is to “assume” (take over) an existing lease from someone who wants to get out and only has a year or few months remaining. These are very often good deals. Swapalease provides listings of such deals. See Short-Term … Read More

Are leased cars covered by Lemon Laws?

Yes, in most states, whether you buy or lease, you are protected as a consumer from getting stuck with a car that’s a dud. However, Consumer Reports identifies the following states as having lemon laws for purchased cars, but none for leased cars: Alaska, Alabama, Colorado, Michigan, Missouri, Nebraska, New Mexico, Ohio, Oklahoma, Pennsylvania, and W. Virginia. Check with your state Attorney General’s office of Consumer Affairs to be sure and to check for more … Read More

Do I need good credit to lease a car?

Yes. A lease is similar to a loan in that the leasing company is trusting you to make regular payments against the money they have tied up in the car you drive. You may find it difficult if not impossible to lease if the dealer obtains your credit report and finds that you have a spotty payment record or have too many financial obligations already.  Unfortunately many people have never seen their credit report, which … Read More

What insurance is required on a lease?

Leasing requires that you carry and pay for liability, collision, and comprehensive insurance on your leased car, just as you would if you purchased. However, the amount of required insurance specified in your lease contract will nearly always be more than the state-required minimum liability coverage you might otherwise choose to carry on your vehicles. In that case, insurance for your leased car will be more expensive. See the article Car Insurance for Leased Cars for more details.

Can I buy extra miles for my car lease?

Yes, most leasing companies will allow you to “buy” extra miles up front — often at a less expensive rate — and include the cost in your monthly payments. For example, say you know you’ll drive 20,000 miles over the limit in a 24 month lease. If the “buy” rate is 12 cents per mile, you’ll spend 20,000 x $.12 = $2400. Spread over the 24 month lease, this means you’ll pay $100 extra per … Read More

Do I get my down payment back at lease-end?

You do not get your down payment back because it is  an up-front prepayment of part of your capitalized cost — to help reduce your monthly payments. Some people confuse “down payment” with “security deposit,” which is refundable to you at the end of your lease. Some leases require a security deposit, most do not. See Down Payment for more details.

Can I refinance my lease?

No. Leases cannot be refinanced in the same way a loan might be refinanced. If your objective is to lower your monthly lease payment, contact your lease company, bank, or finance company to ask if they can offer you any assistance. See Refinance Car Lease for more details.

What are the tax benefits of car leasing?

If you use your leased vehicle for business purposes, you can generally directly deduct the costs as business expenses — monthly payments, insurance, mileage, maintenance — based on the percentage of business use versus non-business use. The actual benefits depend on the specifics of your business situation. For this reason and because tax rules are never simple, you should get the advice of a CPA or tax advisor before making any decisions. If you don’t … Read More

What if I’ve decided to buy, not lease?

That’s fine. You still need to find the best price possible, just like if you were leasing, which you can do at You may also want to use a good auto loan calculator to determine your payments and total loan costs if you plan to finance your purchase.

Where can I find the trade-in value of my car?

The best online sources of market resale and trade-in values for used cars is Kelley Blue Book and NADA Guides. However, understand that these prices are educated estimates and may differ from each other.

Can I return a leased vehicle?

No. Leasing is not renting. Leasing is a long-term commitment similar to a loan. Once the lease contract has been signed and the vehicle driven off the dealer’s lot, the deal is done. There is no 3-day, 30 day, or any other time period in which a leased car can be returned, unless the dealer provided written notification of such a policy. A car lease cannot be canceled although it can be terminated early, if that … Read More

Do I pay interest on a car lease?

Yes, but it’s a little different than for a loan. You always pay a finance fee, called money factor, on a car lease just as you pay a finance fee, called interest, on a car loan. Money factor is expressed as a very small number such as .00175 but can be converted to APR interest rate by multiplying by 2400. For example, a lease money factor of .00175 is equivalent to 4.2% APR interest rate. … Read More

Can I trade my car for a lease?

Absolutely. You can trade a car and lease a new car. You’ll get credit for its value just as you would for a car purchase. Your trade-in credit acts as a down payment and reduces your monthly lease payment. If you still owe money on the car, the dealer will pay off your old loan as part of the trade deal. However, if you still owe more than your car is worth, it gets more … Read More

Can I lease a car with no mileage limit?

No, not with a consumer vehicle lease, the kind we discuss on this web site. All “closed-end” consumer car leases have a mileage limit, on which the lease-end residual value is base, which is used to calculated the monthly payment. As we say many times on this site, leasing is not renting, and doesn’t work like renting. Having said the above, “open-end” commercial business leases typically don’t have mileage limits — but the lease essentially … Read More

Can I get a business car lease and get tax benefits?

Only if you are a business and will use the vehicle for legitimate documented business purposes. Otherwise a business car lease will provide no benefits, and a “closed-end” consumer lease would be a better solution.

How much car can I afford to lease?

If you know approximately what monthly lease payment you can afford, use our Lease Affordability Calculator to determine what car price you might lease.

What is a good money factor?

A good lease money factor is one that is equivalent to the current lowest new-car loan APR interest rates. Current new-car loan rates can be found at but can vary by region of country and bank or finance company. To convert money factor to interest APR, or APR to money factor, see Money Factor Converter.

What is a good residual value?

A good car lease residual value is one that is at least 50% of the MSRP sticker price of a leased vehicle, for a 36 month lease. Higher residuals produce better deals and lower monthly payments. Find average residual values for all vehicle makes and models in the Lease Residual Calculator in the Lease Kit.

Can I trade my leased car?

It depends. Technically, a leased car can be traded just like a purchased car. However, since a lease balance is paid down much slower than a loan — because payments are much smaller — it’s common to have no trade equity at any time during the lease. If the lease balance (“buyout”) is more than the trade value of the vehicle, the lease is “upside down.” Trading might still be feasible, however. See Trade Leased … Read More

Can I buy extra miles in the middle of my lease?

No. You can only buy extra miles at the beginning of a lease. If in the middle of a lease, you can begin saving money to pay the lease-end over-mileage fee. See our Lease Mileage Calculator to determine how much to save each month.

Can I cancel my car lease?

No. There are no policies or laws that give consumers the right to cancel a car lease or purchase once papers have been signed and the vehicle driven off the dealer’s lot. There’s a common misconception that there are 24-hour or 3-day “right-of-return” or “cooling off” laws that apply to automobile purchases or leases.  Such laws don’t exist.

What is dealer profit margin?

Dealer profit margin is the difference between sale price of a vehicle and dealer’s cost. Generally, potential profit margin is the difference between MSRP sticker price and dealer invoice price. However, most vehicles sell for less than MSRP and a dealer’s invoice cost can be offset by bonuses, holdbacks, and factory-to-dealer rebates. Therefore, profit can easily be different for every car a dealer sells.

How can I lower my car lease payment?

Unfortunately, there are no options for reducing car lease payments. Furthermore, there is no way to refinance a lease as there might with a car loan. If you feel that you can no longer afford your lease, your only option may be to terminate your lease early or transfer your lease. Early terminations can often be expensive, so take caution if you think this might be a viable option for you. And transfers are not … Read More

How to calculate total lease miles?

Car lease mileage allowances  are always stated as miles per year or annual mileage. For example a lease might allow 10,000 miles per year. Divide by 12 to get 834 miles per month. If the lease is for, say, 39 months, multiply 39 times the monthly mileage allowance of 834 miles to get a total of 32,526 miles for the entire lease term.

Can I lease a car at 18 years old?

Maybe. Leasing requires a good credit score which most 18 year-olds don’t have since they have not had time to build credit. It also requires a good steady job, which is usually a problem for 18-year olds, especially those in college. Therefore, the most practical option that would allow a teen to lease a car would be to have a co-signer, someone who is willing to take over payments if the primary lessee fails to … Read More

What is a lease inception fee?

At the time a car lease contract is signed, there are payments and fees that must be paid by cash or check. These combined costs are called  “amount due at lease inception.” The costs and fees that are typically due at lease inception can be some or all of the following: First month’s payment Down payment (cap cost reduction) Tax on down payment Official tag and registration fees Security deposit (very rare) Although some leases … Read More

How can I lower my car lease payment?

If you are already in a car lease and the contract has been signed, the monthly payment as specified in the contract can’t be changed anytime during the life of the lease. It is not possible to change the terms of the lease in any way that might reduce the monthly payment amount. Unlike a car loan, which can be refinanced, leases cannot be refinanced. It is not possible to end one lease and begin another … Read More

Can I remove a co-signer from a lease?

Can I remove a co-signer from a lease? No. A lease is a long-term contract. Its terms and conditions cannot be changed mid-lease, nor can the lease contract be rewritten. Furthermore, it’s not possible to “refinance” a lease, and remove a co-signer, as might be possible with a loan.

Lease Deals

Where can I find new car prices and invoice prices

The best places to find online car prices are and There you can find MSRP “sticker” prices, dealer invoice prices, and learn what other people are actually paying for the cars you are interested in. You can also get guaranteed price quotes that include any incentives being offered by the car manufacturer, and are better than most deals you could negotiate on your own. Local dealers will honor the quotes that you receive from … Read More

When is the best time to lease a car?

The best time to lease is when car manufacturers are sponsoring (subventing) promotional deals (see Best Car Deals). These special leases usually have a short time period in which they are available, and are generally very good deals. You’ll see the deals advertised on TV, in local newspapers, and on car company web sites. The reason these are better deals than a dealer alone can offer is that the manufacturer can manipulate ALL factors in the lease, price … Read More

Is this car lease a good deal, or not?

The Lease Inspector in our Lease Kit was designed just for that purpose. Simply plug in the numbers directly from your lease deal and you’ll get your answer immediately. If you simply need a quick evaluation of a proposed or advertised lease deal, you can use our new Lease Deal Calculator .

Are some cars better to lease than others?

Yes. Those with the highest lease-end residual values make better leases. For two cars of the same price, one with a high residual value and the other with a low residual value, the one with high residual value will have lower monthly payments and therefore be a better lease deal. See our Lease Kit which contains  Lease Ratings of all vehicle makes and models, based on residual value.

Which cars make the best lease deals?

We provide an updated list of lease ratings for all vehicle makes and models in our Lease Kit. The list rates each vehicle as Above Average (best deals), Average, or Below Average (worst deals). Car manufacturers sometimes offer special limited-time lease deals on certain models that temporarily improve ratings.

Do Truecar prices work for leases?

Yes. TrueCar prices are valid for car leases as well as purchases. The best lease deals are those with the lowest vehicle price. One of the best ways to get a low price, without stressful haggling, is to use a service such as Truecar.

Did I get a good deal on my lease?

There are several factors that determine whether a car lease is good, just average, or bad. One is the price that the lease is based on. Another is the residual value. And finally it depends on the money factor (lease finance rate). It’s the combination of all these factors that produces the monthly payment and the value of the deal. The best and easiest way to evaluate any car lease deal is with the Lease … Read More

Lease Kit

I purchased your Lease Kit but forgot how to access it

Access your Lease Kit at  where you’ll be asked to enter your Registration Code.  If you’ve also forgotten your Registration Code, send an email with your name, email address used at time of order, and approximate order date to contact @

Does your Lease Kit contain dealer residuals and money factors?

No. We do not provide residuals and money factors that you might expect to get from a particular dealer, for a particular vehicle, on a particular day. These factors change regularly and can be different in different parts of the country. However, our Lease Kit does provide average residual percentages for all vehicle makes and models. This allows you to evaluate and compare residuals you might receive from a dealer to determine if it’s better … Read More

Does the Lease Kit have a money-back guarantee?

Yes. If you are not happy with the Lease Kit, simply ask us for a refund.

Can the Lease Kit be used for Canadian leases?

Yes. The only difference is “miles” versus “kilometers” when it comes to mileage allowances. However, some car models that are sold in Canada but not the U.S. would not be included in our Lease Kit.

Does the Lease Kit cover used-car leases?

No. See our article, Used Car Leases for more details.

Can I use the Lease Kit on a smartphone or tablet?

Yes. The Lease Kit is designed to operate on any computer or smart device. It does, however, require Internet access during use. Access the Lease Kit at  

How do I get the Lease Kit?

Easy. Simply go to where you’ll find all the information you need to get your Lease Kit.

Is the Lease Kit a book and will it be shipped to me?

No, it is not a book. The Lease Kit is a set of unique database-driven interactive online leasing tools and calculators, meaning that you use it through your computer’s Internet browser and there is nothing that needs to be mailed to you, downloaded, or installed.

Do you have an affiliate program for your Lease Kit?

Yes, we offer an affiliate program for our Lease Kit. You can read the details at