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Leasing the car you are interested in allows you to experience the feeling of owning the vehicle of your choice while providing you with the flexibility of not having to commit to a full purchase of it. A lease gives you the opportunity to own a car for a period of timing, generally 24, 36, or 48 months; then at the end of that time period you are given the option of fully owning the vehicle by paying the remaining price or you can move on to a different car. Our free price quotes give you access to the cheapest lease car prices and can lead you to the dealers who have the best car lease deals.
Cheap leasing deals can be difficult to understand if you’ve never experienced them before. We’ve got some helpful information on the things that go into a car lease contract and things to expect with car lease payments.
The residual value is a key piece of information that you need to be aware of when choosing what car you want to lease. Residual value represents the overall worth the car you lease retains throughout the leasing term. With any new car, whether you lease or buy it, the second you take the car off the dealership lot it depreciates in value. When you purchase a car, this depreciation does not make as much difference; however, with leases the residual value of the vehicle plays an intricate part in your monthly payments. To figure out the monthly payments the residual value of the vehicle at the end of the term is compared to base sale price of the car, also known as the capitalized cost. A car that does not depreciate as much over the term of the lease is worth more to the dealer when you return it, thus you get a better deal on monthly payments.
The common depreciation on a vehicle during the lease term can be anywhere between 30%-40%. Here’s an illustration to help you understand why seeking out a car with higher residual value is essential to saving money. You agree on a lease for a car with a capitalized cost of $30,000. A car with a higher residual value would depreciate a lower amount, so it drops in value by 30%. This is a $9,000 reduction, meaning it’s now worth $21,000 to the dealer. A 40% reduction in price means a $12,000 drop in price, leaving the dealers with a vehicle only worth $18,000. This is a $3,000 difference that you will have to pay for in your monthly payments if you choose the car or truck with a lower residual value.
Sale Price or Capitalized Cost
This price is the one that you come to an agreement with the salesperson. It’s a common misconception that you can’t negotiate the sale price of a vehicle that you plan to lease, the same way you would if you bought it. Not true! The sticker price on a vehicle is always negotiable. Getting a free price quote allows you the opportunity to find the true value of the vehicle you are interested in and will help you work the dealer down to a price that you are comfortable paying.
Money factor can also be referred to as the lease rate, its the equivalent of the interest rate on your auto loan. When you sign a leasing agreement you are entering into a legal contract that makes you obligated to make monthly payments throughout the entire term of the lease. The money factor remains constant for the whole term. You can figure out the interest rate you will receive on your lease by multiplying the lease rate by 2400.