Incorrect. It depends on the leasing company. (archive)

Like I said in my post, Lexus does it differently. Or at least used to. I know because I leased a 93 coupe and bought out of the lease early. I asked them how they calculated balance owing and they said it was a straight declining balance method - exactly the same as determining the balance remaining on a morgage. I did my own calculations of how much it should be and was within pennies of their amount. Zero penalties. I don't know how other companies do it, nor do I know if Lexus Financial Services has changed.

There is absolutely no way that I would lease from any company that accrued interest the way you suggested (all interest accrued at once). I'm not denying that some companies do it, I'm just saying that NOBODY should ever lease that way. There's just too many reasons people could need to get out of their lease. (Mine was voluntary to pay off the car).

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