June 19, 2012
It goes without any objection that the facility of leasing an automobile is the best choice you can ever make, but the problem is that people opting for this facility seldom know what this process involves. So in this article I will share some tips to make your vehicle leasing easy and smooth.
1. Capitalized Rate
It is worth mentioning that the capitalized rate is generally the reduced selling cost that the dealer is utilizing to calculate your monthly fees. If it’s a relevant car leasing deal, then the capitalized rate will be considerably lower than the MSRP. Remember that the lower capitalized rate, the lower your monthly lease fees.
Generally, MSRP refers for the term of manufacturer’s suggested retail price. This is generally a marked up option of the invoice cost which is what the dealer are to pays the manufacturer of the vehicle to put the automobile on the lot. It is essential to always compare the MSRP of an automobile considered to its invoice rate to get to know if the solution you are option for is really any beneficial.
3. Residual Value
It is also worth mentioning that the residual value of car leasing is a percentage or a dollar amount that represents the projected cost of a vehicle after a specific amount of months or years. It is normally set by the finance company that offers your leasing contract and cannot be changed for any reasons. When searching for a relevant automobile to lease, you are always to seek automobiles with high residual costs. Vehicles with higher residual rates have lower monthly payments and this is pretty beneficial for those people who cannot afford paying high fees due to financial problems. In fact, you may use a vehicle lease calculator to get to know how variations in residual rates increase or decrease leasing payments you are to pay monthly.
4. Money Factor
This term is generally treated as the interest rate in car leasing. The money factor is to be a small numeric sum that is to be comparable to the interest rates acceptable for automobile loans. You are to understand the way to convert money factors available with a particular vehicle leasing company into interest rates to get an idea of how much the auto dealer is requiring you to pay in finance fees for your leasing contract. Actually in order to get the equivalent rate, you need to take the money factor offered and then multiply it by 2400. After that it is necessary to compare this cost to the interest rates acceptable for clients interested in financing an automobile. In the case rates are close, everything is ok and leasing solution is fair.