Leasing a vehicle

One good thing about leasing cars, or so I observed while watching the Real Housewives of Orange County..

When the bank forecloses and takes all your assets, they won't take away your two late model high-end Mercedes Benzes... because they're leased and you have no equity in them.

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Need information: can u nego. the overall price u pay, pros, cons

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The selling price to the leasing company is called the Capitalized Value or Gross Cap Cost.

You can reduce the monthly payments by reducing the cap cost or putting cash down. This is called cap cost reduction.

The selling price is the gross cap cost, and the higher the gross cap cost, the higher your monthly payment.

You must negotiate a lower selling price on a lease, just like you would if you are buying the car.

A large cap cost reduction (down payment) hides a bad lease. For example, a BMW ad lists fees and down payments totaling $5289.00. On the BMW ad, they divert your attention to the low monthly payment of $275.00, but let’s add up how much the entire lease is costing us. You must amortize the $5289.00 down into the 30 months of the lease. This means your effective average monthly payments during the 30 month lease will be $275.00 + $5289.00 / 30 = $451.00. They mislead you into thinking your monthly payments are only $275.00, which is right, but it’s actually costing you $451.00 a month because you are only focused on the low monthly payment, ignoring what they did to you up front.

Money factor – A leasing term that expresses the cost of borrowing. To convert the money factor to a recognizable interest rate, multiply it by 24. For example, a money factor of .00345 x 24 = 8.28 % interest. The money factor is negotiable and consumers who lease a new car should look for a money factor close to the current interest rate charged for new car loans.

Residual value – The amount agreed upon to represent the value of the car at the end of a lease. The residual value affects the amount of your monthly payment. The higher the residual value, the less you will pay each month to lease your vehicle. Always know the residual value of the vehicle by looking it up so you can verify they are not quoting too low an amount.

Goals When Leasing a Vehicle

1. Get as low a capitalized value as possible.
2. Get as high a residual value (the value leasing companies estimated the car will be worth at lease end, expressed as % MSRP). The residual value affects the amount of your monthly payment. The higher the residual value, the less you will pay each month to lease your car.
3. Get as low a money factor (a number used to calculate finance charges (interest) for your monthly payment). To get the APR, multiply the money factor by 2,400. When converting money factor to APR, it should be at least be comparable to or lower than new car loan rates.
4. Pay $0 down, $0 security deposit, $0 bank fees, and $0 dealer fees!

What Will Cover said. There's nothing wrong with leasing a vehicle, it's simply a matter of comparing what it costs you to lease the vehicle versus buying it. Most people don't know all the variables to figure this out and get arse raped. Leasing has a negative connotation because "you don't own the car at the end of the lease". Big fricking deal. Figure out what it's going to cost to lease vs to own, all that info is available on the interwebs, and make your decision based on that. The end.

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If I ever lease a vehicle I hope somebody shoots me before I sign anything.

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I leased a car once, I wish I had shot myself instead. All the genuises with their financal calculators can show you on paper how great it works out. Their calulations never factor in things like your concept of normal wear and the dealer's not being quite the same. Buy a 2-3 year old car, pay cash if possible, and laugh at the people dumpimg money into a lease.

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Their calulations never factor in things like your concept of normal wear

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What is considered normal wear is spelled out in the lease agreement.

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and the dealer's not being quite the same.

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What does this have to do with it? When you lease, the lease is done through whatever financing arm the manufacturer designates and the dealer gets paid just like they sold you the car. Inspections are done by a 3rd party inspection company which is many times designated in the lease agreement and you don't have to return the car to the same dealership you purchased it from.

The biggest problem with leases is that most people don't go into it fully educated which really isn't different from people not understanding credit card cardholder agreements or mortgage closing documents People = stupid.