Way to Save #36: Know Your Lease

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Leasing is more complicated than buying. But when you boil it down, leasing is essentially like financing part of a car’s life. There are three main components to a lease: the capitalized cost (“purchase” price), the money factor (interest rate), … Continued

Leasing is more complicated than buying. But when you boil it down, leasing is essentially like financing part of a car’s life. There are three main components to a lease: the capitalized cost (“purchase” price), the money factor (interest rate), the residual value (what it’s worth when the lease is up). You should be familiar with each of these terms, because changing any one of them will change the lease payments. And when you approach leasing, ignore payments. Negotiate the capitalized cost just like you would if you were buying, then the money factor, just like you would if you were borrowing. Let the payments take care of themselves.

Stacy Johnson

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