Depreciation refers to the loss in the value of a vehicle over time. This reduction in value is what lessees pay for throughout the life-cycle of an auto lease. Other fees, including rent charges and sales taxes, are also part of what lessees pay for, but they represent a small fraction of the monthly payments. Depreciation accounts for the biggest portion of a monthly car lease payment.
Prospective lessees should pay close attention to the projected depreciation of a vehicle of interest since this indicates how high or how low their monthly lease payments will be. Vehicles with low depreciation will have noticeably lower monthly payments than vehicles with high depreciation.