Most people sign a lease without understanding what sets the monthly payment. Here's what the dealer knows that you should.
When you lease, you pay for the depreciation during your term plus a finance charge — not the full value of the car. The monthly payment covers roughly: (cap cost − residual value) ÷ months + finance charge.
Cap cost is the negotiated selling price — yes, you can negotiate this on a lease. Residual value is what the manufacturer estimates the car will be worth at lease end, set by the finance arm and not negotiable. Money factor is the lease equivalent of an interest rate — multiply by 2,400 to get approximate APR.
Leases set an annual mileage limit (typically 10,000–15,000 miles/year). Excess mileage costs $0.15–$0.25/mile at return. If you drive more than the cap, buy extra miles upfront — it's always cheaper than paying overages later.