What To Think About When Considering A Lease Deal
Shopping for a good lease deal can seem intimidating for those who have never leased a vehicle before. It’s important to note that there are a few important details to focus on. The first detail is how much money is required out of pocket at the beginning. Next, review the monthly payments and be sure to consider taxes and fees. The contract you sign will have specifications on how many miles you’re allowed to drive called the mileage allowance, and any fees associated with going over that may amount to a costly oversight. Maintenance costs can also add up if you’ve signed a lease longer than the vehicle’s warranty. Be sure to also consider lease-specific insurance requirements as these might be more than you were previously paying and add to your monthly costs.
Key Factors In A Good Lease Deal
Below we’ve outlined some important key factors to consider and analyze when shopping around for the lease deal that’s best for you.
- High Residual Value: The residual value of the car is what it is predicted to be worth at the end of your lease. One of the perks of a lease is that you’re not paying for the entire value of the car so you’ll have a lower monthly payment than if you were buying the vehicle. Cars that hold their value over time better tend to have a good lease deal as the higher residual value means you will pay less to drive the car during the lease.
- Lease factor/Money factor: A good lease deal will have a lower lease factor, sometimes called the money factor. This number is basically the interest rate that you pay during the lease and usually represented by a small decimal number. The lease factor can be converted to a percentage by multiplying the number by 2,400.
- Fees: When negotiating a good lease deal, fees like security deposits, acquisition fees and disposition fees can be different from one dealership to the next. These fees can add up but also be lowered or removed if they are included in the lease.
- Customer Retention Offers: Dealerships and auto makers looking to close lease deals will sometimes offer substantial rebates or discounts on a lease. If you’re a repeat customer or refer a relative to the same dealership, you can probably take advantage of a customer appreciation offer. Discounts for military, college grads, and first responders are also commonly offered and can make the difference between one deal and another.
What Percentage Of MSRP Should I Pay For A Lease Deal?
When researching the different aspects of a lease deal, you’ll come across the “one percent rule.” This method is intended to be used for a 36 month lease and 12,000 mileage allowance and divides the monthly payment you will be making for the lease (without taxes) by the MSRP. A good lease deal will be 1% or lower.
What Is The 90% Lease Rule?
Vehicles are not usually leased under a finance lease, but rather an operating lease where ownership of the vehicle remains with the dealership at the end of the lease term. If the total of the residual value and the net present value of all lease payments is divided by the fair market value of the vehicle and comes out to 90% or lower, then it’s a good lease deal.
What Is A Good Money Factor On A Lease?
A good lease deal will have a money factor less than 0.001 (2.4%), an average lease factor will be between 0.0025 (6%) and 0.0035 (8.4%), and a high interest rate is anything above the average. You may be able to negotiate a lower money factor in the terms of your lease agreement or get your lease from a bank that charges a lower money factor.
Can You Negotiate The Price Of A Leased Vehicle?
There are many factors that you can negotiate before you sign your lease. While the price of the vehicle, also known as the gross capitalized cost, can be one of them, doing your homework can give your wallet a break down the road. Be sure to discuss the mileage allowance and the buyout price to give yourself the option to buy the vehicle at the end of the lease. The disposition fee is what you are charged for the dealer to make the vehicle sale worthy and can be negotiated down or even eliminated. If you have a long lease term and the car’s warranty would expire before your lease is up, negotiating an extended warranty can save you a lot of money if anything needs maintenance.
Rafferty Subaru Can Offer Great Lease Deals On A Variety Of Subarus!
Getting into a new Subaru is easier than ever with the great lease deals happening at Rafferty Subaru! Explore the rugged outdoors in the new Outback or Crosstrek or upgrade your commute with the Forester or the all-wheel drive Legacy sedan. Stop by today to discuss a lease that’s right for your wallet and drive home happy!
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