im having a hard time deciding whether to lease or not...i never have and ive read some money websites with explanations of each but its hard to decide...
some say that if for sure i will change car after 3 yrs then i should lease...but i dont know if thats gonna happen...hard to say....we typically dont changes cars often but todays cars dont seem to last that long anyways....
should i want the residual to be high or low, because doesnt my payment depend on that factor... agreed price - the residual = what the payment is with the money factor rate
at the end of the day im still paying the same numbers right?
You'll hear tons of different advice for leasing. In the end, it's really what suits you. What I tell people about leasing, is that you really need to read up on it, and know it front to back (even knowing how to do all the calculations) before even talking with a dealer. The lure of a "lower" monthly payment, as opposed to traditional financing, really catches a lot of people off guard. You can get screwed in a lease agreement if you don't know what you are doing. You want to know the MSRP, the agreed upon "sell" price, the residual value, the money factor, and the term. From there, you will be able to calculate your lease payment. I typically pay 1st months lease payment and agreed upon lease acquisition fees, dealer fees, title fees, etc when taking delivery of the car. No additional money down.
Residual values are typically set from the lender, with most leases done under the financial arm of X or Y automotive company. In most cases, these captive leases are able to offer the best residual value, because they want the money off the rent charge and interest. You can shop through independent banks, but they don't tend to be as competitive. Residual values are "set", but sometimes dealers can take off a percentage, and drop the residual for back end money. So it is good to know what the standard value is for a certain mileage and term, and these values can be typically found on leasing forums (Edmunds tends to provide a lot of info).
Money factors are also similarly set by the lender. These money factors can be marked up for additional profit, and can vary depending upon credit rating. You should get the base rate from the leasing forums or just ask different dealers that you shop. The base rate is where you want to be, as it is effectively the lowest interest rate they offer. With a money factor of, for example, .0012, the equivalent interest rate percentage is .0012 x 2400 = 2.88%
Whether leasing or buying, my philosophy has always been to negotiate the sell price first prior to any incentives/rebates applied. That's always where you have the biggest leverage. From there, knowing what the residual is for the mileage/term sought, and also the base rate for the money factor, can be very powerful in speeding up the negotiation process, and knowing where you want your payment to be. The only other thing that could drive up your monthly payment is what they sell you (service agreements, tire/wheel insurance, etc.) on the back end of the deal in the finance office.