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, having lower payments than other financing options, generally. It’s also convenient because lessees rarely have to pay for any repairs and get to drive a new car every few years. Yet, what you don’t know can cost you, big time. Before you lease, learn about what you’ll be getting into. Follow our tips to make sure you receive the best car lease deal. Pay close attention to three things: initial price, residual value and money factor.

Negotiate the Sale Price of the Car

Thinking that, because it’s a lease, you can’t or don’t need to negotiate the final sale price of the vehicle you plan to lease is a mistake. This error can cost you thousands of dollars over the course of a typical 3-year lease.

Doing some research before entering the negotiation process can save you a lot. Start by getting a price quote for the car you are considering leasing. Bringing the capitalized cost (also called the final sale price) as low as possible will lower your monthly payment.

Consider the Residual Value

Compare models and find those with the best (highest) residual values. Automotive Lease Guide provides this information for all new automobiles 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 will help you save in the end. It means lower monthly payments and lower total price for the lease.

Ever wonder which makes tend to have high residual values? Here are some examples.

  • Honda
  • Toyota
  • Subaru
  • Lexus

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.

To get the best car lease deal, you should pay the same interest on your lease as you would on a car loan, so it makes sense to research a little on automobile financing to know if the quote you get for your lease is reasonable. Go to the dealership armed with your credit score. The higher your credit score, the lower the interest rate you can negotiate. If your credit score is low, you may want to try to fix it before negotiating the money factor. Several online services offer credit repair counseling.

Ready to start getting quotes for the vehicles you like? Click here to get those quotes from any dealer you choose, straight to your inbox. It’s free and easy to shop for cars this way!

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