There are two amounts in a conventional lease that incur charges and



determine your monthly lease payments. First, there is a depreciation

charge which accounts for the value the car loses during the lease term.

Second is a residual amount which is the projected value of the vehicle at

the end of the lease. The sum of these two charges gives the monthly

payments on your lease.The idea behind a pre-paid lease is to eliminate the

finance charges for depreciation and only account for residual value

charges in a single, pre-paid payment at the beginning of the lease.

Single-payment leases are devised with spendthrifts in mind: no cycle of

monthly payments, a new car every two to three years and no interest in

purchasing the vehicle at the end of the lease. You should only consider

this type of lease if you are concerned about not being able to make monthly

payments and have a lot of cash upfront.