Leasing an SUV sounds simple: drive a new vehicle, pay monthly, return it after a few years. But the real cost? It’s hidden in three numbers: residuals, money factors, and incentives. Skip understanding these, and you could overpay by thousands-even if the monthly payment looks great.
What Residual Value Really Means
Residual value is the estimated worth of your SUV at the end of the lease. It’s not random. Automakers and leasing companies use historical data, demand trends, and depreciation rates to set it. For example, a 2025 Honda CR-V might have a 62% residual after 36 months. That means if the MSRP is $35,000, the car is projected to be worth $21,700 at lease end.
Why does this matter? Higher residual = lower monthly payment. Why? Because you’re only paying for the depreciation. If the residual is too low, you’re paying for more of the car’s value loss. That’s why some SUVs like the Toyota RAV4 and Subaru Outback hold their value so well-they have residuals above 60% even after three years.
Low residuals? That’s usually a red flag. It means the car is expected to drop in value fast. Maybe it’s a new model with unproven reliability, or it’s from a brand with weak resale demand. Always ask: What’s the projected residual? Don’t take the salesperson’s word-ask for the lease worksheet.
Money Factor: The Hidden Interest Rate
Think of the money factor as the lease version of an interest rate. But it’s not labeled that way. It’s a tiny decimal, like 0.00185. To convert it to an annual percentage rate (APR), multiply by 2,400. So 0.00185 × 2,400 = 4.44% APR.
Why not just say APR? Because leasing companies want to obscure the true cost. A money factor of 0.0025 might look small, but that’s 6% APR-higher than most car loans. Credit score matters here. If you have excellent credit (750+), you’ll often get money factors under 0.0012, which is under 3% APR. If your score is below 680, you could be looking at 0.0025 or higher.
Always ask: What’s my money factor? And compare it to current auto loan rates. If the lease APR is higher than what you’d pay financing the same SUV outright, you’re not getting a deal-you’re just paying more over time.
Incentives: The Secret Discount That Changes Everything
Lease incentives aren’t just “$1,000 off.” They’re often hidden in the residual, the money factor, or as a cash rebate. For example, in early 2026, the Ford Edge had a $3,500 lease cash incentive. That’s not applied to the sticker price-it’s subtracted from the capitalized cost before the lease calculation even starts.
Some manufacturers offer dealer-only incentives. That means the dealer might not tell you unless you ask. Others give loyalty bonuses-$500 extra if you’re leasing again from the same brand. Or manufacturer-to-consumer rebates tied to specific models, like the Hyundai Tucson getting $2,000 in lease cash just for choosing the SEL trim.
Check manufacturer websites directly. Don’t rely on dealerships. Go to Ford.com, Hyundai.com, or Toyota.com, find the lease section, and filter by SUV. You’ll see real-time incentives. If a dealer says “no incentives,” they’re either lying or not checking properly.
How to Calculate Your True Monthly Payment
Here’s the formula leasing companies use-but you can do it yourself:
- Net Capitalized Cost = MSRP - Down Payment - Incentives
- Depreciation Fee = (Net Cap Cost - Residual Value) ÷ Lease Term (in months)
- Finance Fee = (Net Cap Cost + Residual Value) × Money Factor
- Total Monthly Payment = Depreciation Fee + Finance Fee + Sales Tax
Example: 2025 Kia Sportage, MSRP $32,000, $2,000 incentive, 0% down, 36-month lease, 60% residual, money factor 0.0014.
- Net Cap Cost = $32,000 - $2,000 = $30,000
- Residual = $32,000 × 0.60 = $19,200
- Depreciation Fee = ($30,000 - $19,200) ÷ 36 = $300
- Finance Fee = ($30,000 + $19,200) × 0.0014 = $68.88
- Total Before Tax = $300 + $68.88 = $368.88
With 7% sales tax? Add $25.82. Final payment: $394.70. Now compare that to the dealer’s quote. If they say $410, they’re hiding something.
What SUVs Have the Best Lease Deals Right Now?
As of February 2026, these SUVs are offering the strongest combinations of high residuals, low money factors, and big incentives:
| Model | Residual (%) | Money Factor | Lease Incentive | Monthly Payment (36 mo, 10k/mi) |
|---|---|---|---|---|
| Toyota RAV4 | 65% | 0.00110 | $1,500 | $325 |
| Honda CR-V | 63% | 0.00105 | $2,000 | $310 |
| Hyundai Tucson | 61% | 0.00095 | $3,000 | $295 |
| Kia Sportage | 60% | 0.00140 | $2,500 | $315 |
| Ford Escape | 58% | 0.00160 | $3,500 | $330 |
Notice how Hyundai and Honda lead? High residuals + low money factors + big cash incentives = unbeatable numbers. The Ford Escape has the biggest incentive, but its lower residual and higher money factor mean it’s not the best value overall.
Red Flags in Lease Offers
Here’s what to watch for:
- “No money down” sounds great, but it raises your monthly payment. You’re rolling the down payment into the lease.
- Excess mileage fees of $0.25 per mile or more are common. If you drive 15,000 miles a year, you’ll pay extra unless you negotiate higher limits upfront.
- Disposition fees of $350-$500 are standard, but some brands waive them. Ask.
- Wear-and-tear charges for minor scratches or worn tires. Get the inspection guidelines before signing.
- Extended warranties sold at lease end. You don’t need them. The factory warranty usually covers the full term.
Should You Lease or Buy?
Leasing makes sense if you:
- Drive less than 12,000 miles a year
- Like driving a new SUV every 2-3 years
- Want lower monthly payments and minimal maintenance costs
Buy if you:
- Drive more than 15,000 miles a year
- Keep cars 7+ years
- Want to build equity and avoid end-of-lease fees
Leasing isn’t a waste. It’s a smart financial tool-if you understand the numbers. Buying gives you long-term value. Leasing gives you short-term control. Choose based on your habits, not the monthly payment alone.
What to Do Next
Don’t walk into a dealership without this:
- Know your credit score
- Check manufacturer websites for current incentives
- Calculate the payment yourself using the formula
- Ask for the lease worksheet before signing
- Compare at least 3 dealerships
If a dealer says, “This is the best deal,” walk out. There’s always a better one. Leasing is competitive. The market moves fast. February 2026 is a great time to lock in low money factors and big incentives-before they disappear.
Are SUV lease deals better than sedan lease deals right now?
Yes, in early 2026, SUVs are offering more competitive lease deals than sedans. Demand for SUVs remains high, and manufacturers are using bigger incentives to move inventory. Sedans like the Honda Accord and Toyota Camry still have good leases, but SUVs like the Hyundai Tucson and Honda CR-V are offering lower money factors and higher residuals. SUVs also tend to hold value better, making them more attractive for leasing.
Can you negotiate the residual value on a lease?
No, you cannot negotiate the residual value. It’s set by the leasing company based on industry data and projected depreciation. But you can choose a different model or trim level that has a higher residual. For example, a base model SUV might have a 58% residual, while the top trim has 63%. Picking the higher-residual option lowers your monthly payment even if the sticker price is higher.
Is a 0.00100 money factor good?
Yes, a money factor of 0.00100 is excellent. It converts to a 2.4% APR, which is lower than most new car loan rates. This typically only happens for buyers with excellent credit (750+) on models with high demand and strong residuals. If you’re offered this, lock it in. It’s a rare deal.
Do lease incentives apply to all trims?
Not always. Many lease incentives are trim-specific. For example, a $3,000 incentive might only apply to the base or mid-level trim, not the top-tier model. Always check the manufacturer’s website for exact eligibility. Sometimes, the highest trim has a better residual, making it a better overall deal even without the cash incentive.
What happens if I exceed my mileage limit?
You pay a per-mile fee-usually between $0.15 and $0.25 per mile over your limit. If you go 18,000 miles a year on a 12,000-mile lease, you’ll pay $9,000 extra at the end. That’s more than a full year’s payment. If you know you’ll drive more, negotiate a higher limit upfront. It costs less per mile than paying after the fact.
