1) High residual value: Leasing experts agree that the single most important factor in a lease is the vehicle's residual value, which is a prediction of what it will be worth at the end of the lease term. This "perceived value of the vehicle" is set either by leasing-information provider ALG Inc., or the bank that is writing the lease contract, says David Cavano, manager of the Automobile Club of Southern California's car-buying service.
Here's why residual value is key to the car shopper: The higher the residual value, the lower the monthly payment. Knowing this will explain why you can sometimes lease a Lexus for less than a Toyota, says Sergio Stiberman, CEO of LeaseTrader.com, a company that helps consumers transfer leases. The Lexus likely has a higher residual value, which offsets the higher price of the car, Stiberman says.
Take the example of a $30,000 car that a consumer wants to lease for three years. In most cases, the average car will be worth half its value after three years, Stiberman says. So the residual value of this hypothetical car is $15,000. Over three years, it has lost $15,000 of its value.
Here's a simple way to estimate what your lease payment would be for such a car. Take that lost value and divide it by the number of months in the lease: $15,000 divided by 36 months equals a $416 monthly payment. Keep in mind, however, that there are additional fees, sales tax and interest that will make the actual monthly lease payment higher.
Compare this scenario to another $30,000 car that has a residual value of 65 percent. This car will be worth $19,500 at the end of the lease — it only lost $10,500 (35 percent) of its value. Divide $10,500 by 36 months and you get a monthly lease payment of $292, to which you'd add fees, tax and interest.
So when you're shopping for a lease, the first rule of thumb is to look for cars that hold their value better — the ones that have high residual values. This means the monthly payments will be lower. Stiberman says an old leasing adage is true: "When you lease, you can drive more car for less money."
If you want to calculate what the lease payments would be on a car you're considering, you'll need to know that residual value. You can call the dealer for an exact residual value or make an educated guess. Fifty percent residual value is the average, while 64 percent is about as high as the value ever gets for three-year leases.