Dealer participation is when the dealer makes income off a marked up rate. TFS allows up to a 1% rate markup that the dealer gets when the lease originates. Before CFPB stepped in, this was capped at a much higher amount. I think they have a 90 day chargeback policy on it as well.
All captives (and Ally/US Bank) allow for rate markup with varying degrees of capping the top end. Each dealer runs their business uniquely so some will discount heavy but mark rates up and often are heavy on the f&i product pushing. Others like Cody’s Toyota store, are more transparent and don’t mark rates up as a business rule.
In most cases I’ve seen, the highest credit tier customers get the biggest markups unless they know how to find the buy rate on Edmunds.