Quote:
Originally Posted by doug_999
There are two important things you need to know with leasing (ok, there are like 14, but here are the basics)
1. The car will have a residual (that's the percentage of the MSRP that the car will be worth at the end of the lease). So in the comment above, the car will be worth 55% of the MSRP at the end of the lease.
2. There will be a Money Factor (MF). This is the interest rate the dealer is charging you. It is a weird number (like .00130) and the key is to multiply it by 2400 to get your actual interest rate.
Now random crap...
Many options are worthless at trade if you buy a car. That B&O stereo you just dropped $3,700 on? Basically goes to $0 at trade in-time. That cool Tanzanite Blue color you paid $1,950 for? Yours - all yours, cause it does not add to the value.
Except when you lease. In these cases you will get at least x% back on your purchase (you still have to pay finance charges - but that is still better). So if you like to load up your cars, always consider leasing - unless you keep them forever.
For the most part leasing works like this
1. PurchasePrice-Residual. This is the amount you are financing and paying off over X number of years. Sales taxes can play a big part here depending on where you live.
2. Residual - This is the amount you are borrowing with no intention of paying back. So you pay interest on this amount over the period of the lease.
Add #1 and #2 and you have your lease payment. Or just search for a lease calculator.
There are other fees you will be hit with - like a lease acquisition fee (the fee the leasing company charges to initiate the lease (about $925 for a BMW), a lease disposition fee ($350 I think is the going rate) - which is the fee to get rid of your car at the end of the lease.
PS - you got a Gran Coupe to $120K? That's impressive 
Edit - the dealer can't play with the residual but they can increase the money factor. That's how they get ya |
you are completely right about the trade-in for options. In fact we pay for a large value of options during the lease time while there is no value added at trade-in.
The payment for lease can be also calculated this way:
1. PurchasePrive - Residual
2. monthly rate-fee which is (SalesPrice+Residual)xMF which is the interest fee
The total lease payment is the sum of these two + tax and also other fees that you mentioned