How to Read a Car Leasing Calculator

The world of car leasing includes a lot of terminology and phrases that are unfamiliar to most Canadians, but adding a few new words to your vocabulary can certainly help you understand how car leases are calculated. Our goal here at Somerville Auto is to empower our car leasing customers and help them get the best vehicle with ideal financing terms. Understanding the following vehicle leasing terms will ensure that you know exactly what we’re talking about when we start getting into the details of the best car leasing deal for you:

Acquisition Fee: An industry standard feature referring to the rate it costs to process the vehicle lease.

Capitalization cost: You might hear us referring to this as the “cap cost,” and all this means is the vehicle cost. It means the same thing as the purchase price, for cars being sold rather than leased.

Cap Cost Reduction: This term is similar to a down payment when you buy a car or home, and is the up-front cost you pay when leasing your vehicle plus any other assessed fees. As with a home purchase, the larger the down payment (or in this case, “cap cost reduction”), the lower your monthly fees will be. If you are trading in a vehicle, the value of your used car can be applied to the cap cost reduction.

Depreciation: Over time, every car loses value, and this term refers to the difference between the original purchase or capitalization cost and its residual value at the end of the lease.

MSRP:

Purchase Option: When you contractually have the ability to purchase the leased vehicle, after the lease term is up, for a listed price.

Security Deposit: Most leases will require a security deposit prior to the start of the car lease.

For more tips on car financing, check out our comprehensive guide for meeting with the bank. Low credit score? Here’s some advice for buying or leasing a vehicle with bad credit. If you’re still wondering whether you should buy or lease a vehicle, our article on leasing vs. buying might help you come to the best decision for you.