Getting the Best Lease Deal

Last Modified: May 28, 2019 by Jeff Ostroff  | Published August 12, 2000

With a lease, your overall deal can be broken into two parts. The first is the price of the car which in leasing turns into the Gross Capital Cost. The second part which is often overlooked is the Money Factor which is basically the APR but complicated on purpose to confuse you.

Biggest Complaints We Get About Leases

Many of our visitors have a hard time getting the dealer to reveal what money factor/APR they are charging them for their lease. The money factor is APR/2400. The dealers often arrogantly tell them "Regulation M does not require us to reveal this, so we don't." While this is true, it borders on poor ethics because as a consumer, you should know how much interest you are paying, not just the resulting payment.

The other common complaint we get is the dealer sells them the car at full sticker price. They want you to focus on the monthly payment but you should be focusing on everything, especially the sale price (Gross Capital Cost).

Shop Around

Just like buying anything, the only way to get a good deal is to shop around. You need to negotiate both the price and the money factor. Make sure the dealer shows you both numbers so you can compare it with other offers. You must also pay attention to all of the lease fees in order to compare the deals

Don't Be Fooled By Lower Payments

A sneaky dealer will quote a lower monthly payment but you need to realize that they might be adding months to the term. Don't fall for this common scam! You can end up paying a lot more than you think. Some dealers pack payments, so always check their numbers with Expert Lease Pro.

Sales Tax Considerations

Most states tax only your monthly payment but some states tax the full amount of the car even though you are only using up just 50% of the value before you return it. Even worse, in these states if you buy the car at the end of the lease, you pay sales tax on the residual amount also!

window sticker

"Purchase Price" is Important

It will be called the Gross Capital Cost. The higher it is, the higher your lease payments and the dealer makes more profit so negotiate it first and make sure it is itemized on the paperwork along with the money factor. Remember, many dealers will try and distract you with the monthly payments.

Large Cap Cost Reduction Hides a Bad Lease

Many deals require huge down payments at inception. This will lower your monthly payment but it adds a big cost. You must amortize the down payment over the term of the lease. To figure this out just divide your up front costs by the number of months and then add it to the monthly payment amount to get an idea of what you are really paying.

Zero Down Does Not Mean You Owe "Zero"

It just means the down payment part of your inception costs is $0. Confused? Remember, their definition of down payment is cap cost reduction. The other fees due at closing (i.e. dealer fees, acquisition fees, bank fees, can add up to over $1,000. They can also shift fees to the end of the lease in the form of disposition or termination fees. Closing costs should always be used in the calculations to tell you what you are really paying.

Auto Lease Calculators

Read my online article about using leasing software. Every person should be using the same type of software that the dealers use. This way you can calculate the payments and verify their numbers. Without it you're sailing the ocean of confusion, and they'll swallow you whole. I would never in a million years lease a car without using this software first.

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