There are five:
1. Sale price: Your lease payment is based in part on the sale price of the car. Just like when you buy a car, the lower the sale price, the lower the lease payment. To make sure you’re getting a fair sale price, check out Edmunds average price paid, also known as True Market Value (TMV®). This tool tells you what other people are paying for the same car.
2. Residual percentage and amount: The residual value of the car is expressed as a percentage, and it’s an important part of your deal. The higher the residual percentage, the lower the amount of depreciation you have to pay. In other words, a high residual percentage should net you a lower monthly payment. The residual is also the amount you would pay the bank if you decided you wanted to purchase your leased car at the end of the term.
3. Allotted miles and the over-mileage charge: When you sign your lease, you’re allowed to drive a certain number of miles annually. If you exceed that, you’ll be charged a fee, usually assessed in cents per mile. They can be high: from 15 to 25 cents per mile. If you think you’re going to go over the mileage limit, you can add extra miles when you sign your lease agreement for a small increase in payment. This will likely be cheaper than paying the overage later. If you do go over your miles but you’ve decided to buy the car when the lease is over, you will not be charged for going over the allotted miles.
4. Disposition fee. This fee is charged by the leasing company to cover the expense of cleaning up and selling the car after you return it at the end of the lease. Most charge between $300 and $400. You normally won’t be able to avoid this charge unless you buy the car at the end of the lease or, in some cases, lease or purchase another car of the same brand.
5. Money factor: This is the lease equivalent of the annual percentage rate (APR) in a car-purchase loan. As with an APR, the lower the money factor, the better. Unlike an APR, it’s unlikely that the dealership will offer you a lower money factor than you got with your credit union or bank. Money factors are very small numbers, such as .00125 or .00074. Multiply by 2,400 to get the equivalent APR.