Three Things You Need to Know to Get a Great Car Lease Deal
Car Leasing is an attractive financing option for many drivers. It’s affordable, convenient and easy to access. Before you lease, we encourage you to follow our tips to make sure you receive the best car lease deal possible. Pay close attention to three things: initial price, residual value and money factor.
Negotiate the Sale Price of the Car
Be informed. Start by getting a price quote for the car you are considering leasing. Know your options so you can negotiate the price.
Bring the capitalized cost (also called the final sale price) as low as possible so your monthly payment is reduced.
Consider the Residual Value
Find cars with the best (highest) residual values. Automotive Lease Guide provides this information and gives awards to specific models and manufacturers for residual value excellence. Remember that leasing is primarily based on this number.
Typically, a car will depreciate 30%-40% of the original sale price during the first three years of ownership. Let’s do the simple math. 35% depreciation on a $30,000 vehicle = $10,500, while 43% of $30,000 = $12,900. That’s a difference of $2,400 that you would pay during your auto lease term. Choosing a car with a good residual value equals lower monthly payments and lower total price for the lease.
The Money Factor
The money factor, also called the lease rate or lease factor, can vary, so you should know how much it will cost you.
Know how to translate an annual interest rate (APR) into a money factor, and vice versa. This is fairly simple. All you have to do is multiply the money factor by 2400 and that gives you the interest rate. Click here to learn more.
You should pay the same interest on your lease as you would on a car loan, therefore researching automobile financing options is key to know if the lease is reasonable.
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