-Since leasing is legally different from buying or financing, it involves slightly different terminology, although the concepts are quite similar. The most important concepts are "adjusted capitalized cost," "residual value" and "money factor." -Adjusted capitalized cost represents the actual purchase price of your vehicle. -The "adjusted capitalized cost" is determined by the vehicle's purchase price (capitalized cost). Along with any applicable charges and fees (acquisition fees, taxes, etc.), minus any capitalized costreductions (down payments, trade-in allowances, and any other applicable discounts). Residual value represents the expected value of your vehicle to the lease owner at the end of the lease. It may vary depending on several factors, including; -The rate at which your vehicle is expected to depreciate -The length of your lease -The number of miles accounted for in your lease agreement. -The money factor effectively acts as an interest rate, and reflects the cost of the money "borrowed on your behalf" at the beginning of your lease.