Auto leasing is very different from buying a new vehicle. When leasing you only pay for using the vehicle for a specific length of time. Leasing can be cheaper than buying, however it’s important to understand the following key components to ensure you get the top deal on your auto lease.
Capital Cost: This is the purchase price of the vehicle. Before visiting the dealership arm yourself with the MSRP and factory invoice prices of the vehicles you are interested in leasing. You can negotiate the capital cost with the dealer. The best auto lease deals are less than MSRP.
Once you and the dealer have agreed on a capital cost you can factor in any available rebates, incentives, or auto lease specials. These should never be negotiated with the capital cost as they are bonus savings.
Capital Reduction: If you make a down payment or trade-in you can reduce the capital cost even further. Reducing the capital cost will decrease your monthly payments and interest expenses.
Make sure you know the actual trade-in value of your old auto before negotiating. You can easily locate this information online.
Residual Value: Lease payments cover the amount an auto depreciates while you drive it. The higher the residual value, usually expressed in percentage, the lower your monthly payment and overall cost. Though you are not likely to be able to negotiate the residual value, you can shop around. Check out similar vehicles from multiple manufactures to find the best auto lease residual values.
Money Factor: It is important not to confuse the money factor with the interest rate. Remember, the money factor will be a decimal figure, while the interest rate will be a percentage. You can multiply the money factor by 2400 to estimate the interest rate. The lower the money factor, the better lease deal.
Lease Term: Lease terms are usually in months, 24, 36, etc… The longer the term the smaller your monthly payments, but also, the more interest you will pay. As most cars drastically start loosing residual value after 24 months, a shorter lease term is often a better deal. Make sure the manufacturer warranty covers your vehicle for the length of the lease.
APR: The annual percentage rate is the yearly interest plus fees and services. Look for an APR slightly lower than current auto loan interest rates. Always shop around to find the best interest rate available.
It is important to note that no one factor will equal the top auto lease deal. Research each and choose the best option. Request a free lease quote today and connect with multiple dealerships offering the top leasing specials in your area. Find the best auto lease deals in minutes and save thousands!
