Finding car leasing companies that offer great terms can be easy as long as you know what to look for. Here are a few things you should try to find in your next lease.
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Interest Rates
With a car lease the interest rate is sometimes called the Money Factor, but it's the same thing. The main difference between buying a car with an interest rate and a lease with the money factor is that the money factor is a percentage that is flat and will be divided by the overall term of the lease. So, if you find a lease with an 8% factor, this will be divided over the length of the loan, and then applied to your payments. You want to find a lease that is clear on the money factor. Don't think that an 8% money factor is worse than a .0030 factor. The smaller number has just been divided already. Do the math on your own when you are looking for a favorable lease money factor.
Lease Terms
The term is the number of months you will be paying on the lease. In most cases leases can be found for 24, 36, 48 or 60 months. Some leasing companies will offer leases for different amounts of time, like 38 or even 42 months. The 36 month option is the most popular and sensible since the chances are higher that the manufacturer warranty will cover the car for the length of the lease. When you are leasing a vehicle, you want to take the lease length and the length of the warranty in to account. A good lease term will allow you to afford the car and will always be covered by warranty.
Capitalized Costs
This is a fancy way to say "price." The lease will be based on the overall price of the car. Since the prices are always negotiable, you want to make sure that you are able to get a great price on the car before you start looking at the leases. With a car that has been negotiated, you will pay less per month in lease fees. Only after you have negotiated a fair price should you ask the dealer to write the lease.
Residual Value
The residual value of the car is important as well when you look at a lease option. This is basically the amount of money the car is expected to be worth at the end of the lease term. Some cars depreciate differently than others. As a general rule though, a car is worth about half of the original sticker price after 3 years. In some cases the dealers will raise the residual costs to help reduce the monthly payments. Be cautious with this. Many people want to buy the car after the lease and doing this can hurt you. Keep the residual value in mind when you look for the ideal lease terms.
