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Car Leasing FAQ

How Does a Used Car Lease Work?

How Does a Used Car Lease Work?

A used car lease works similarly to a new car lease:

  • You pay for the vehicle’s depreciation during the lease term.

  • The leasing company sets a residual value (projected value at lease end).

  • Your payment is based on:

    • Selling price (capitalized cost)

    • Residual value

    • Money factor (lease interest rate)

    • Lease term and mileage allowance

Residual values are typically set by the lender and are not negotiable, but the selling price and sometimes the money factor may be negotiable.