Car Leasing Secrets Revealed Will Save You Money

When it comes to automobile leasing, what you don't know can cost you big time. A recent study by J.D. Powers and Associates reveals that automobile leasing is at a four year high. Before you consider the low monthly payments for a leased car, learn about what you'll be getting into. Follow our tips to make sure you receive the best car lease deal.

Pay close attention to three things: initial price, residual value and money factor. They will be essential to ensure you're getting the best car lease deal. Leasing can become a confusing and complicated process, that's why the BuyingAdvice team has prepared three easy tips to make sure you don't pay too much:

Negotiate the sale price of the car - This is the first mistake people make: Thinking that just because it's a lease, they can't or don't need to negotiate the final sale price of the vehicle they plan to lease. This error can cost you thousands of dollars over the course of a typical 3-year lease.

Doing some research before entering the negotiation process can save you a lot. Start by getting a price quote for the car you are considering leasing. Getting the capitalized cost (also called the final sale price) as low as possible will lower your monthly payment.

Consider the residual value - Compare models and find those with the best - highest - residual values. Automotive Lease Guide provides this information for all new automobiles and gives awards to specific models and manufacturers for residual value excellence.

Remember that leasing is primarily based on this number. Typically, a car will depreciate 30%-40% of the original sale price during the first three years of ownership. Let's do the simple math: 35% depreciation of a $30,000 vehicle = $10,500, while 43% of $30,000 = $12,900. That's a difference of $2,400 that you would pay during your auto lease term! Choosing a car with good residual values will help you save in the end. It means lower monthly payments and lower total price for the lease. In 2008 the auto industry best residual value brands are: Honda, Toyota, Volkswagen, Subaru, Infinity, Lexus, BMW and Nissan.

The money factor - The dealer bought the car from the manufacturer, and is lending it to you - and charging you interest to do so. The money factor, also called the lease rate or lease factor, can vary, so you should know how much extra it will cost you. Know how to translate an annual interest rate (APR) into a money factor, and vice versa. This is fairly simple: All you have to do is multiply the money factor by 2400 and that gives you the interest rate.

To get the best car lease deal you should pay the same interest on your lease as you would on a car loan, so it makes sense to research a little on automobile financing to know if the quote you get for your lease is reasonable. Go to the dealership armed with your credit score. The higher your credit score, the lower the interest rate you can negotiate. If your credit score is low, you may want to try to fix it before negotiating the money factor. Several online services offer credit repair counseling.