Methodology

How we get to the true cost.

The headline lease payment is not the cost of the lease. LeaseWorth uses one transparent, deterministic method to convert any offer into a single honest number you can compare against any other offer.

The effective-cost method

A leased car's real monthly cost is not the advertised payment — it is the advertised payment plus every non-refundable dollar you hand over up front, spread across the months you'll drive it.

So the method is simple and honest: take the total of what the lease actually costs you — the base monthly payments, the rent charge (the lease's interest), and all non-refundable drive-off cash (cap-cost reduction / down payment, acquisition and doc fees, the first month) — and amortize the upfront cash over the term. Refundable items, like a security deposit you get back, are excluded because they are not a cost.

The result is the true effective monthly cost. It is why a "$0‑down, $399/mo" deal and a "$3,000‑down, $299/mo" deal on the same car can finally be compared on the same line — once the $3,000 is amortized, the gap is a fraction of the headline difference, and the cash deal also puts $3,000 at risk if the car is totaled.

Money factor is converted to its APR equivalent (APR = MF × 2400), depreciation and rent charge are derived from the standard lease math, and — when you set your state — the correct state tax method is folded in (see lease tax by state). The engine is deterministic: the same inputs always produce the same number.

The 1% lease-ratio rule

To judge whether a lease is actually a good deal — not just to rank two offers — we use the well-known lease-ratio (often called the "1% rule"):

lease ratio = (true effective monthly cost ÷ MSRP) × 100

It expresses your monthly cost as a percentage of the car's sticker price, so a $30,000 car and a $70,000 car are judged on the same scale:

• Under 1.0% — a strong lease.
• 1.0%–1.2% — fair; worth negotiating.
• Over 1.2% — you are likely overpaying.

The 1% rule is a rule of thumb, not a law. It is most reliable on mainstream vehicles; heavily subsidized or luxury leases can beat or miss it for reasons the ratio alone won't show. We report it as a signal, not a verdict.

Why we publish this

Most lease tools and brokers show the headline payment beside a separate "due at signing," which lets multi-thousand-dollar drive-offs hide the real cost. LeaseWorth refuses to do that. Showing our work — the method, the formula, the thresholds — is the point: an honest number is only trustworthy if you can see how it was reached.

Respect for dealers — fair, not zero

Being honest about cost is not the same as begrudging a dealer their living. A fair deal still leaves the dealer a reasonable profit — for sourcing the car, carrying inventory, handling the paperwork, and standing behind the sale. That margin is normal, and a showroom that earns it is one that's still there when you need service.

LeaseWorth is built to help you avoid overpaying — the multi-thousand-dollar drive-offs and padded money factors that the headline payment hides — not to zero out anyone's margin. Use the true effective cost and the lease ratio to negotiate from facts, then aim for a number that's fair to both sides. A deal both parties feel good about is the one that actually closes.

Want to run it? Try the effective-cost calculator, or call the same deterministic math via the developer API.