HOW LEASING WORKS

Leasing in plain English — you don't buy the car, you pay for the slice of it you use · BDC training board

THE PHONE CALL — the dashed blanks are yours: type your caller's real answers
Customer: “I'm driving a , my payment's about $, and I don't want to be over $. Somebody told me I should lease. What's the difference?”
This board answers that question with real numbers — the same car, both roads.

1Buy it or rent the slice you use

FINANCING — you buy the whole car

You borrow the full price, pay it all back plus interest, and at the end the title is yours. Every payment buys a piece of metal you keep.

LEASING — you pay for the slice you use

The bank buys the car and bets on what it'll still be worth at the end — that number is the residual. You only pay for the value the car loses while you drive it, plus rent on the bank's money. At the end, hand back the keys — or buy the rest.

New — MSRP $34,995Month 36

The slice you use

The bank keeps it

2The sticker matters twice on a lease

On a purchase, MSRP is just the starting suggestion. On a lease it does double duty: the selling price (on a lease it's called the cap cost) is still negotiated down from it — and the residual is figured as a percentage of MSRP. Yes: the price is negotiable on a lease too. Every dollar off the cap cost comes straight out of the payment.

MSRP — window sticker ($)

Selling price — “cap cost” ($)

3The rest of the lease deal

Type in your own numbers — everything below updates instantly.

Residual (% of MSRP)

Money factor

Cash down — “cap reduction” ($)

Acquisition fee ($)

DMV / doc fees ($)

Sales tax (%)

Miles per year

Overage charge (¢ / mile)

Where's the trade? It works on a lease too. If the Rogue has equity, that equity becomes cap reduction — same as cash down. If they're upside down, the shortfall rolls into the cap cost and the lease payment carries it, same as a loan would.

Money factor

× 2400 =

Real interest rate (% APR)

The money factor is interest wearing a costume. Multiply it by 2400 and the costume comes off. Type either side — the other follows.

4The order of the lease math

Same idea as a purchase order — a strict sequence. First build what the lease is based on:

Then the payment is just three pieces:

① The slice — depreciation

—

The value the car loses while they drive it, split into equal monthly bites. This is the heart of every lease.

② The rent charge

—

The bank still charges rent on its money — it just calls it a “money factor” instead of an interest rate.

③ Sales tax

—

On a lease, tax hits only the payments — not the whole car. (NY collects it up front; most deals roll it in.)

5The payment — and the stretch

Monthly lease payment

—

Lease it for 36 months

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6Lease vs finance — same car, two roads

Lease it

Finance it

Finance rate (% APR)

Finance months

7Miles — and the three doors at lease end

Door #1

Hand back the keys

Walk away. Nothing to sell, nothing to trade, no loan balance following them. Settle any damage or extra miles — done.

Door #2

Buy it at the residual

Love the car? Buy out the bank's slice at the number that was locked in on day one — —. No renegotiating, no surprises.

Door #3

Cash in the equity

If the car is worth more than the residual at lease end, that gap is the customer's equity — trade it in and put the difference to work on the next one.