Tips on Buying Cars: Leasing, leasing, financing

Question
How does the dealer determing your payment, residual and interest on a lease? Thanks

Answer
Hi Bobby,

The residual is set by the ALG guide which the financial institution cannot waiver from except to lower it, which makes your payment higher. Some people do this if they are going to drive a lot of miles. A residual is what the bank thinks the vehicle will be worth at the end of the lease. Honda has a higher residual than a Chevy, making your payment lower. The higher the residual, the lower your payment.

It is a money factor that the banks use for a lease. Your credit determines this. The bank may have a .00201 money factor for good credit, times that by 2400 and that will give you an interest rate. The dealers will typically add a point to this to make money.

The price of the car, the money factor, the residual, your trade-in...all determines your payment.

Now that I have confused you more, send me the vehicle you are interested in and I'll tell you what your payment should be.

Good Luck.