Tips and Tricks for Understanding Vehicle Leasing
Understanding how to lease a car can be complicated for someone who is doing it for the first time. Luckily, Rosen Hyundai is here to give you a quick breakdown of all the things you should keep in mind before you visit your local Algonquin Hyundai dealer to lease a Hyundai.
Leases can be intimidating with all their legal terminology, lists of fees and unique financial components. But while lease contracts may appear to be complicated, they’re actually easy to understand if you know a few key terms:
Capitalized cost is the price you agree to pay for the car. After you deduct the cost of your down payment and/or trade-in vehicle (also known as a “capitalized cost reduction”), the amount left over is the leasing company’s investment in the car.
Residual value is the estimated value of the car after the lease term is up. Dealers come up with this number by calculating a percentage of the vehicle’s original MSRP (also known as “Manufacturer’s Suggested Retail Price”) and then converting that into a dollar amount.
Money factor (also known as the “lease rate,” “lease factor,” or simply “factor”) is pretty much the same thing as the annual percentage rate (APR) you might be familiar with from conventional loans. However, the “money factor” is expressed as a small decimal fraction.
Now that you’ve got the jargon down, here are a few key tips to help you ensure that the lease you’re signing is the best one possible:
- Don’t be afraid to negotiate. Some people assume that since they’re only leasing, they don’t have the right to negotiate the price of the vehicle. That’s incorrect. You should always negotiate the vehicle’s purchase price as if you were planning to buy it outright. Discussion of a lease deal should only begin after you’ve gotten the price down to where you want it. Don’t forget to make sure that’s the number used for the lease’s gross capitalized cost.
- Negotiate, negotiate, negotiate. Don’t forget that the mileage limit, down payment and purchase-option price are also negotiable!
- Do your research. Take some time before you head into the dealership to research the money factor in other leases so that you can negotiate that too. Also make sure the vehicle you’ve chosen is worth at least as much as its buyout price so that you can buy it after the lease ends without any regrets.
- Always buy the insurance. Sometimes GAP (Guaranteed Auto Protection) Insurance is included in the lease but if it’s not, make sure you buy it to protect yourself from liability in the event that the vehicle is stolen or totaled in a collision.
Now that you’re a Hyundai lease pro, visit Rosen Hyundai for a look at our available cars for lease near you. Our friendly sales staff will be happy to answer any of your leasing questions today.
