Leasing a Toyota model is a common alternative to buying, largely due to its flexibility, lower monthly payments, and the ability to drive the newest Toyota cars when they are first released. If you are new to leasing, you might be confused by some of the terminology.
Here at MotorWorld Toyota, our finance experts are happy to explain some of the most common Toyota lease terms.
Leasing Terms Explained
Whether you’re leasing a new Toyota Camry, Toyota RAV4, or other Toyota model, you’ll want to know the following lease terms.
- Term: The term of the lease is how long you’ll be leasing the car for. Most leases have 24, 36, 48, or 60-month terms. The longer your lease term, the lower your monthly payments will be.
- Money factor: The lease’s money factor is comparable to an interest rate, but it is calculated differently. The money factor is represented as a number such as 0025. To convert this to a more familiar interest rate, multiply this number by 2,400.
- Residual: This is the amount that your car is worth at the end of a lease. The residual value is calculated before you sign the lease.
- Depreciation: Because your car slowly loses value over time, it’s going to be worth less than when you first started leasing it. What you pay in this loss in value is called deprecation.
- Capitalized cost: Also known as cap cost, this is the negotiated selling price of the car plus any additional fees that you might want to include in the monthly lease payment.
Start the Leasing Process Today!
To sign up for a Toyota lease or to ask any questions, talk to a friendly Toyota dealer at MotorWorld Toyota today!
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