leasing a car

How to lease a brand new car with no money down in the USA

Note: This article is outdated… click here for my updated article on how to lease a new car and save at least 20% off MSRP…

In the vast majority of situations here in the United States, I recommend leasing over any other ways to finance and drive a car.

This might surprise you.

Because we have been brainwashed that leasing is a fool’s way to drive a car.

But when we exploit the benefits of leasing (and avoid the common traps), we are able to drive a lot more car for a lot less money over our lifetime.

We all know leasing is confusing

Leasing is meant to seem complicated.

This is done on purpose, because it tricks (most) people into making poor financial choices. And these bad decisions put more profit into the dealer’s bank account.

But when we exploit leasing in our favor, it is almost always cheaper than any other form of financing a new car.

Leasing vs buying a car

When we finance a car, we agree to pay it off in monthly payments. This includes the principle (the total cost of the car) plus interest (the amount the bank charges us for borrowing money).

With a traditionally financed car, we keep the car once it is paid off.

But with a lease, we only pay back the vehicle’s decline in value (a.k.a. the residual, depreciation or resale value).

So when we find a car that keeps its value, we get to drive a lot more car for a lot less cash.

At the end of a lease (usually 36 or 48 months), we turn the car back in and get into a new car.

Leasing is cheaper than buying a car

Many car-industry journalist (wrongly) tell us that leasing is the more expensive option. This is only true if we make the classic mistakes (which I explain below).

Yet leasing is one of the best-kept secrets of the rich.

Because leasing is almost always cheaper than buying – even if we drive a lot of miles each year.

The benefits of leasing a car

Here are the reasons I LOVE leasing a brand new car every few years:

Surprise: leasing costs less than financing a new car

When we drive the right new car at the right price for the right amount of time, leasing is ALWAYS cheaper than financing.

Always.

Car-industry journalists tell us the opposite – that leasing is a terrible financial decision.

But the math proves them wrong every time…

Here is a spreadsheet of leasing a 2016 Toyota RAV4 Limited vs. traditional financing:

lease vs. buy analysis

 

As we see, we can drive 3 brand new Toyota RAV4s (Limited Editions) every 3 years for less cash than driving a new RAV4 into the ground over 9 years.

Even driving twice the allotted mileage is still cheaper than buying the exact same car.

How is leasing a brand new car every 3 years cheaper?

Most people forget to add in maintenance and repairs to the total cost of car ownership. But maintenance and repairs are included with each lease deal.

Even worse, we pay interest on the entire price of a car when we finance it. This adds thousands of dollars to the cost of new-car ownership.

State sales tax is (usually) twice the price when financing a car vs. leasing it (see below for more about this).

Even gas is more expensive in an older car…

On average, cars lose almost a mile per gallon of efficiency each year we drive the same car. At $2.00 a gallon for gas, that is over $6,000.00 a year in extra gas expenses after just 9 years.

Leasing offers worry-free car driving

Leasing affords us the ability to drive a new car every few years. (The sweet spot is actually 30 months).

And the best part is there is virtually no stress in leasing.

Leasing’s only surprise maintenance cost: $59 a year

When we choose the right car and the right leasing package, maintenance is virtually free.

Even oil changes are included.

There is just one catch: leasing does not include windshield-wiper replacements or washer fluid. (I highly recommend BOSCH refills.) An entire set costs about $54 on most cars. And they should last more than twice the length of any other wipers – more than a year. Windshield wiper fluid is about $5 a year.

After that, that is it. Maintenance and repairs are always covered with a new car lease (when you set it up the right way).

Some leasing plans even offer free loaner cars when our car needs maintenance or repairs.

And since we are driving new cars, we never have to worry about breakdowns. In the rare case that something breaks, just return it to the dealer for a free fix.

Leasing allows us to drive cars that keep us safe

Year after year, cars are getting safer and safer.

In fact, car companies are striving for “zero deaths” soon.

Leasing allows us to swap out into a new car twice as fast as finance cars. The average car loan is 66 months… so leasing gets us into safer cars twice as fast as traditional car financing.

(Most) states subsidize lease deals

When we buy a car, we can pay thousands in state sales taxes.

But most states tax leases different. They only tax on the smaller monthly payment, not the entire vehicle price. This can save us at least half of state sales taxes.

(The exceptions are Arkansas, Illinois, Maryland, Oklahoma, Texas and Virginia – they charge sales tax on the entire price of our new car.)

Even better, if you trade in a used car, our car’s equity amount might offset the state sales tax due.

The IRS subsidizes leased cars

But wait… it gets even better:

If we itemize deductions when filing our yearly tax returns, some of the car’s cost is tax deductible. This further reduces the cost of driving a new car.

Leasing gives us GAP coverage car insurance FREE

If a new car gets stolen or gets totaled in an accident, there is often a large financial gap…

This gap is the difference between a car’s insurance replacement value and the payments remaining on a lease (or loan).

Most lease contracts include the cost of GAP coverage (where as this is an expensive insurance option with a traditional car loan.)

A no down payment car lease is the savvy financial move

Leasing provides the option of skipping a down payment.

(See below on why we should NEVER, EVER put a penny down on a leased car.)

All we need is the first-month’s lease payment along with tag and registration fees to get into a new car.

Myths about leasing a car

When we read anything about car leasing, we are bullied into thinking it is riddled with financial traps.

Car sellers use complicated jargon and the lure of lower prices to trick people into making bad lease decisions.

Even worse, they scare us into thinking we can only drive a certain amount of mileage before penalties kick in.

And do not even think about getting a coffee stain on the seat. They say doing so will cost us big bucks when we turn in our leased car.

They say the worst part about leasing is we are “throwing money down the drain” since we do not keep our car.

But the truth is savvy people get more car for less money by leasing.

Plus, it is the least stressful way to drive a car.

And yes… those mileage penalties and coffee stains are scare mongering. We never have to pay for these extras. (I will explain below.)

The #1 secret of leasing a car (revealed)

I never forget that laws and contracts ALWAYS hurt the poor and benefit the rich.

Because rich people have access to the secrets that most of us do not.

They ALWAYS have access to legal loopholes that are meant to be exploited by those in the know.

I am about to share with you the biggest loophole of new-car leasing.

Ready?

Here it is…

It is a secret that most people do not know about.

It is the secret that gets most people thinking leasing has mileage and damage penalties.

But the secret is this:

The legal loophole around paying for end-of-lease penalties is to get the dealership to buy our car back from us (instead of turning it in).

Let me repeat this, because it is the secret to get more car for less money.

At any time during a lease, we can sell our leased car to any dealership on the planet. It does not matter if we sell a leased Toyota to a BMW dealership or a leased Audi to a Honda dealership.

Because as soon as we sell the car to the dealership, the lease company gets paid off and cannot charge us for end-of-lease extras.

This is known as an “early lease buyout”.

It is the cost that anyone can buy the car for. And it is calculated at the same time we sign the lease paperwork.

Even better, some dealerships will offer us more for our leased car than the lease early buyout.

Why? Because they can flip our leased car and sell it used on their lot for a ton of profit. (More on this below.)

The truth about mileage overages on car leases

We all hear about leasing and mileage allotments.

They say a lease offers much lower payments, but we are restricted to driving just 12,000 miles per year.

And they say if we go over this amount, we can pay 10 to 50 cents a mile as a penalty.

This is true.

It is technically true that is…

Because savvy people never pay this.

Again, the if we find ourselves over the mileage cap, we simply sell the car to any dealership and avoid it. It really is that simple.

You might be thinking, “But Markus, I drive 25,000 miles a year – certainly that is going to make the value of my car plummet, right?”

I hear you:

The car industry warns us about the high cost of mileage…

But the reality is each mile represents about a 5-cent reduction in the residual value of our cars.

For example, the Blue Book Value of my 2011 Toyota RAV4 LE with 36,000 miles is $14,548. Yet if I doubled the allowable miles (to 72,000), the value is $12,700. That is a difference of 1,848 – again, a bit over 5 cents a mile on the overage. No biggie.

The punchline is we never have to pay 10 cents to 50 cents in mileage overages. The worst case scenario is 5 cents a mile (when we sell it back to the dealership).

Even better, almost every dealership is going to waive this mileage penalty when we lease another car with them.

The same is true for damage penalties.

Yes, lease companies can nickel and dime us for minor damage when we turn in our car at the end of our lease.

(Of course car insurance takes care of the cost of any major damage).

This is why it almost never makes sense to turn a car in at lease end.

But when we sell our car to the dealership and lease another car, dealerships look the other way.

Why?…

Can I buy extra miles for my car lease?

Yes you can do this.

Most leasing companies allow us to buy this until the day before we turn a car in.

But remember: when we sell our leased car to any dealership in the world 30 months into our lease, mileage penalties do not apply. (See above for more details).

Can I buy extra miles in the middle of my lease?

Yes, most leasing companies allow us to “buy” extra miles at a less expensive rate. They include the extra cost in the remaining monthly payments.

Most companies will even refund you any unused miles (of your ‘bought’ miles) at lease-end.

But as I say over and over again, it is best to sell back a leased car (instead of turning it in). See above for more about this.

Lease customers are the dealership’s gold

Dealerships make more money on selling us 3 leased cars vs. us running one car into the ground for 9 years.

So they treat lease customers like gold.

They bend over backwards to make us happy.

And we are rewarded with more car for less money (and less stress).

Here is the really good news about leasing

As long as we lease a car for life, we never have to worry about mileage overages and damage to our car.

In fact, we never have to worry about anything (except wiper replacement blades and window fluid).

This is why leasing is (almost) always cheaper than buying a car.

Why is everything included in a lease?

Besides taking care of a dealership’s best customer (i.e. those who get new cars every few years like we do)…

Leased cars make excellent used cars to resell.

There is a ton of profit in turned-in leased cars.

Because of the threat of mileage overage fees and damage charges, lease customers treat their cars better than average.

This means the dealership spend less on getting a car prepped for resale.

Cashing out equity in our car lease

One of the reasons it pays to lease a car with high residual value is we can sell back our car for a tidy profit.

This is one of the many tricks of the trade (that hardly anyone is talking about)…

Car dealers LOVE when we trade in a leased car and hope we are not assessed any damages or mileage overages.

While we stress out on whether we are going to owe money at the end, the dealership is licking their chops…

Because the dealership buys our car from the lease company at the end and sells it as a profitable used car on their lot.

Yes it is true. The dealership makes money twice:

Leasing companies pay the dealership in full when we lease our new car…

The dealership makes more money when they buy our car from the leasing company and sell it as used.

The dealership wins twice.

Ready to lease a car or not?

Hopefully I have assured you that leasing a car for life is (almost) always the best way to drive your ride.

If you agree, here is what to do right now:

Start by choosing a car with a high residual value after 36 months. Anything over 55% gets us into more car for less money.
http://www.truthin7minutes.com/car-residual-value

(The residual value is another name for the salvage or resale value of a car)…

It is the remaining value of an asset after it has been fully depreciated.

In simple speak, it is the amount we can buy the car for at the end of the lease.

The residual value is the most important number in a lease

The payment we send to the leasing company each month is highly dependent on the residual value.

Now here is the most intriguing part:

Some cars have much higher residual values than other cars. This means when a car is durable, reliable (and desirable)… these cars sell for higher prices in the used-car market.

With leasing, we are rewarded when we drive these high-residual cars with lower monthly payments.

The worst leasing deals have low residual values… for example, check out these 36-month leases:

A Chevrolet Spark EV at $27,376 leases for $585.00 a month.

The Smart Car (Electric) selling for $28,750 leases for $672.00 a month.

A Volkswagen Beetle Turbo selling for $31,206 leases for $655.00 a month.

At the other end of the scale, the following cars have high residual values – for example:

A Subaru WRX selling for $27,390 leases for $321 a month.

A Toyota RAV4 (Limited) selling for $32,089 leases for $473 a month.

A Land Rover Discovery Sport selling for $40,550 leases for $491 a month.

Finding cars with higher residual values gets us more car for less price.

So how do we find “expensive” cars that are cheap to drive?

Again, wee simply track down cars with the highest residual values here

Any car greater than 55% residual value on 36 months fits the bill. Any car less than 55% is a car we should skip over.

Here is another lease myth busted – MSRP

Most people who lease think they are stuck paying the MSRP sticker price of a new car.

This is another myth.

Because lowering the cost of a new car in a lease saves us even more money each month.

When I go to lease a new car, I ask for the best price off the MSRP sticker price. This gives the impression I am buying a car. But when I go into the F&I office to sign the paperwork, I ask to lease the car at the lower price.

Choose car upgrades wisely

Some extras are more valuable than others.

Again, the residual value plays the most important part in a lease.

If on the fence about getting these extras:

– All-wheel drive / 4-wheel drive
– Moonroof /sunroof
– Automatic transmission
– Leather seats
– Navigation
– Power seats

… Get them if they are offered – because these 6 extras boost the residual value well over 55% on a new car. And when we sell back our car at the end of our lease, it will boost the worth of our car when we sell it back to the dealership.

How to understand leasing jargon like a 5 year old

Remember, car leases are riddled with complicated jargon to get us to make poor choices.

Here is what you need to know to successfully navigate the leasing labyrinth:

The acronym MSRP (Manufacturer’s Suggested Retail Price) is the full retail price of a new car.

The lease buyout is calculated by taking the MSRP and subtracting the residual percentage…

For example, if a car’s MSRP is $30,000 and the residual percentage is 60%, the residual value is $12,000. You can buy the car at the end of the lease for $12,000 (or sell it back to the dealer for a profit).

The “Invoice Price” is the alleged published dollar amount that the dealer pays the manufacturer for the car…

But the reality is a new car dealer pays a lot less for our car than we are told.

A hacker broke into a dealer’s Reynolds & Reynolds computer system and found car dealers pay less than 50% of MSRP for each car they sell to us.
http://www.reyrey.com

The “Capitalized Cost” (a.k.a. Cap Cost) is the final, negotiated price of your new car.

Most people who lease think they are stuck paying full price. So their MSRP is the same as the Capitalized Cost…

But savvy people who lease cars negotiate this as low as possible to reduce their monthly lease payment.

“Cap Reduction” is a down payment.

Never, ever put a down payment on a lease…

Instead, put it towards a security deposit (more on this below).

The “Money Factor” (a.k.a. Lease Factor) is (sort of) the lease’s interest rate.

I say “sort of” because technically it is a monthly interest rate, not yearly.

To get a ballpark idea of its yearly equivalent, multiply the Money Factor by 2400.

For example, a Money Factor of 0.003015833 is approximately a 7.24% yearly interest rate.

The “Residual Value” is the value of our new car at the end of the lease.

WARNING: Negotiating a higher residual value is going to lower our monthly payments, but we will pay this back in the end. Thus, I do not recommend negotiating this value as we will owe the difference at the end of the lease.

“Lease inception amount” (same as “due at signing” or “drive out” cost) includes all charges that require an up-front payment. This includes taxes, official fees, deposits, first month’s payment, and down payment…

A “Disposition Fee” is some flim-flam charge we pay if we walk away from a lease and turn the car in at the end. I would negotiate this down to zero – just ask.

An “Early Termination Fee” is just like it sounds. If we need to end a lease early, we are assessed this extra fee. I would not negotiate this fee – we should pay a penalty for backing out of a lease contract. With that said, a lease swap is usually a cheaper way of getting out of a lease.

The “Acquisition Fee” (a.k.a. “Lease Inception Fee” or “Origination Fee”) is just a paperwork fee and is negotiable. I would ask to split the fee in half.

Now that you know how to cut through the confusing terminology and jargon, you are better prepared to get more car for less cash.

Time to take action and lease a new car

Remember, the savvy way to drive a car is to lease a new one every few years for life.

And do not fret about mileage limits – because the equity you build (almost always) pays it off when you sell it back to the dealership.

The secret is to jump from one lease to another every 30 months.

Choose a car that boasts at least a 55% residual value at 36 months.

If gas prices are high, search for cars averaging more than 24 miles per gallon.
https://www.fueleconomy.gov/feg/findacar.shtml

Avoid cars without spare tires. Instead, they run on no-flat tires (which are WAY more expensive AND do not last nearly as long as regular tires). Some cars without spares drive with regular tires AND include a fix-a-flat repair kit – not good.

Once you choose a candidate, test drive the car. Do not rush this. Driving a car you hate for 30 months is not fun. Driving a car should be a ton of fun.

Leasing FAQs

What parts of a lease deal are negotiable?

Contrary to rumors and misinformation, everything is negotiable when leasing a car.

Some parts are more negotiable than others. (See my advice above.)

Which is better – leasing or buying?

Again, contrary to misinformation, leasing is almost ALWAYS less expensive than paying cash or financing a car.

The only exception is for some vintage cars (and those who drive just a few thousand miles a year).

Also, leasing allows us to get into newer and safer cars more often – about twice as fast.

Can I use my current car as a trade-in on a new lease?

Absolutely.

In fact, the equity in a trade in reduces the Capitalized Cost (the final negotiated price of the car) AND reduces the state’s sales tax we pay.

When we drive a car with high-residual value, we can make a tidy profit.

When we sell our car to a dealer we lease with, it is possible to come away with cash…

And if we owe more on the car than it is worth, selling it to CarMax is often the best way to go. They often offer the most for our used car. Agree with their assessment and we can walk out with a bank check in about 45 minutes.

What is the difference between a down payment and amount due at signing?

The amount due at signing includes taxes, official fees, security deposits, first month’s payment, and and/or a down payment.

Notice that a “down payment” (cap cost reduction) is only part of the total “due at signing” amount. And as I recommend (below), we should never fork over money for a lease down payment…

“Cap Reduction” is nothing more than a down payment. It lowers the cost of leasing a car…

But savvy people take their down payment and use it as a multiple security deposit instead. This lowers the money factor… which lowers our monthly payment. (See more about this below.)

Down payments are lost forever. Yet multiple security deposits are returned to us (as long as we make our payments on time).

How do I end my lease early?

The penalties for ending a lease early are clearly spelled out in the leasing contract.

But, when we lease a new car with a high residual value, it can be sold back to any dealer in the world without incurring any lease-end costs.

This is why we should (almost) never “turn in” a leased car. Instead, it pays to sell it to the dealership.

(This is a secret car dealerships do not want us to know.)

Some people use this strategy to get into a new car every year or two (even with a 36-month lease).

In fact, Apple’s Steve Jobs leased a new Mercedes every 6 months.

How does sales tax apply for a car lease?

Most states tax leases on the smallest monthly payment, not the entire vehicle price.

This can save us at least half of state sales taxes.

(The exceptions are Arkansas, Illinois, Maryland, Oklahoma, Texas and Virginia – they charge sales tax on the entire price of our new car.)

Even better, when we trade in our used car, the car’s equity amount offsets the state sales tax due.

Can someone else drive my leased car?

Yes we can, but it is often limited to a spouse or family member.

Just submit a list of authorized drivers to the F&I (i.e. Finance & Insurance) salesperson when signing the lease paperwork. Also, submit the same list of names to your car insurance company.

What if I move to another state with my leased car?

It is our responsibility to update our car’s “garaged” address to both the leasing company and our insurance company.

Be warned: moving to a different state can increase or lower our state sales tax rate. This should be a minor difference in most states…

But if we move to Arkansas, Illinois, Maryland, Oklahoma, Texas or Virginia, the increase is large. Because these states charge based on the entire cost of our new car (not the monthly payment)…

If we move from a state that taxes the entire value or sum of lease payments, check with the new state’s Department of Motor Vehicles… we might get a credit or a refund for part of the tax you have already paid.

Registration and tag fees may also be different when we register the car in the new state.

What if I am over my car lease mileage limit?

The average American drives about 12,000 miles per year on their car.

And most lease contracts allow us the same 12,000 miles per year at no extra charge.

With that said, a lease contract can penalize 10 cents to 50 cents per mile for overages…

But the good news is when we sell our car back to the dealership, mileage overages do not apply. (See above on how to sell back our leased car instead of turning it in).

Can I lease a car with no mileage limit?

If we enter a closed-end lease, no.

And open ended leases for personal transportation are not recommended.

But do not fret, we get to avoid lease mileage limits when we sell back our car at the end to the dealership and roll into a new lease. (See above for details about this.)

How do end-of-lease, tire-tread thickness work?

Each lease company has different minimum tire tread thickness required when trading in a leased car.

For example, Toyota says the tire must pass inspection… But unofficially – as long as the tire’s steel belts do not show through, we are good.

But again, I recommend selling back a leased car to avoid all end-of-lease charges. (See above for the details.)

Can I swap cars during my lease?

Yes we can.

(Although leasing companies do not want to advertise this.)

Click here to see my extensive report on assuming a car lease.

Is it possible to lease a used car?

It is possible.

The problem is leasing companies do not like leasing used cars.

Note: some used car dealer advertise that they lease cars or have “lease-to-own” programs. These are not actually leases, but either high-interest purchases or high-rate car rentals.

Where is my interest rate in my lease contract?

A leased car does not use a typical finance rate.

Instead, it uses a “Money Factor”. (They use this lingo to confuse us.)

To figure out a rough estimate of the interest charged per year, simply multiple the Money Factor by 2,400.

Another way to estimate the yearly interest rate is to divide the Lease/Rent Charge (monthly payment) by the number of months in our lease. Then divide the resulting number by the sum of the Adjusted Cap Cost plus Residual.

Quite frankly, I never worry about the interest rate. Instead, I focus on the lowest monthly payment at 36 months (that retains a residual percentage of at least 55%). This is how to drive much more car for much less money.

How does a lease show up in my credit report?

A lease shows up on our credit report just like a standard car loan.

They are not (usually) identified as leases and look just like loans on the report.

Sometimes the amount owed includes the lease residual amount, sometimes not. It depends on the company doing the reporting to the credit bureau.

How can I get residual values before I lease?

Just ask.

Insist on this.

Ask for a money factor, too.

And if you do not get a residual value and money factor ahead of time, threaten to walk away.

Unfortunately, some car dealers artificially inflate residual values to “appear” to offer lower monthly payments. Check my residual reference guide to see that the residuals you get on the paperwork closely matches my list.

In the lease formula, it looks like I’m paying interest on the sum of cap cost and residual?

The finance part of your monthly payment is:

(Cap Cost + Residual) /2 x Money Factor

Can I get a car lease for less than 24 months?

Technically you can, but I recommend a 36-month lease…

Then sell your car back to a dealership around month 30 and get into a new lease….

That is because the average car starts to incur costs about 30,000 miles in… stuff like new tires, new brakes, etc.

I find selling a car back to the dealership (and rolling into a new lease every 30,000 miles) is the sweet spot.

Rinse and repeat this for the rest of your life.

Leasing (the right way) is almost always cheaper than buying a car.

Are leased cars covered by Lemon Laws?

Most states do protect us from getting stuck with a car that is a dud.

The exception is for cars leased in: Alaska, Alabama, Colorado, Michigan, Missouri, Nebraska, New Mexico, Ohio, Oklahoma, Pennsylvania, and West Virginia.

Do I need good credit to lease a car?

Rumor says we need good credit to either lease or finance a car.

But the truth is car dealerships are able to pull off minor miracles for those with bad credit.

Even better, maxing out a Multiple Security Deposit can lower our Money Factor to zero – even if we have bad credit.

Those with credit scores greater than 700 gets us the best leasing rates available. (Car salespeople will be fighting to lease us a car.)

What insurance is required on a car lease?

Lease companies require that we carry a minimum amount of liability, collision and comprehensive insurance.

This typically means we will need liability coverage of $100,000 per person / $300,000 per occurrence and property liability coverage of at least $50,000.

But get this – when we finance a car the traditional way, we still need the same coverage. So leasing a car costs exactly the same for car insurance than buying…

Technically, we pay a bit less for lease insurance, because the lease company includes GAP coverage insurance at no additional cost.

Do I get my down payment back at lease-end?

No we do not.

In fact, we should NEVER submit a down payment. Because we do not get it back.

Never forget it is best to invest as little cash as possible in a depreciating asset. And a car (almost) always depreciates.

Instead of a down payment, apply cash toward a Multiple Security Deposit. It is refundable at the end of the lease term. (See below for more details.)

Can I refinance my lease?

No.

If you are asking because you cannot afford the payment…

The good news is you can sell back your leased car to a dealership and roll into a cheaper lease.

If you are selling back a car with a high residual value, you should roll into a new lease without having to come up with extra cash.

Or, you can bring your car to CarMax and have them buy out your lease. CarMax regularly offers the highest offer for our used or leased car. They take care of all the lease-buyout paperwork for us. And if you have accumulated enough “lease equity”, you might cash out with a small profit.

What are the tax benefits of car leasing?

When we itemize our tax return here in the States, we get to write off some of the cost of our monthly lease payments.

Where can I find the trade-in value of my car?

Most dealerships use the NADA Used Car Values lookup site.

Do I pay interest on a car lease?

Sort of…

In leasing jargon, it is called the Money Factor.

(See above for more details on this.)

Can I trade my current car for a new car lease?

Yes.

Even better, trading in a car helps reduce your monthly payments AND offset states taxes, too.

(See above for more about this.)

How much car can I afford to lease?

This lease payment calculator helps you find the right car to fit your budget.

What is a good leasing money factor?

A good lease money factor is one that is equal to the current lowest new-car loan APR interest rates.

Remember to multiply the money factor by 2,400 to get an approximate equal yearly interest rate.

Click here to see the most up-to-date averages.

What is a good residual value on a new car for leasing?

A good car lease residual value is one that is at least 55% of the MSRP sticker price of a new vehicle, for a 36-month lease.

Higher residual values give us more car for less monthly payments.

Click here to see the residual value of all cars sold in the USA.

Can I lease a car at 18 years old?

Maybe.

If an 18-year old has established credit, it is worth trying.

A co-signer (someone willing to take over payments if the lessee fails to do so) would fit the bill. Even better, a co-signer is (probably) going to get a lower money factor – which lowers the monthly payment.

Where can I find new car prices and invoice prices

Sites like TrueCar.com and Edmunds.com show us cars priced at “invoice price.”

This gives us the idea that there is no more room to negotiate…

The truth the best negotiators get at least 15% off the MSRP (sticker price).

And remember… negotiating a car’s price lowers our monthly payment – even on a leased car.

When is the best time to lease a car?

I always move into a new car lease on a Friday night – always after eating dinner.

Friday nights are usually slower than busy Saturdays.

Most of the dealership employees want to get home early on a Friday night. As a result, the negotiating and paperwork speeds up compared to any other day of the week.

And when a Friday night occurs on the last few days of the month, we might get even better deals. Why? Because salespeople work on tiered commissions. And just one more car sale for the month could bump them to a higher commissioned tier.

If a Friday occurs on December 31st, you could get a steeply discounted leased car.

Can I lease a car with no cash down?

Kind of.

Instead of paying a down payment (or security deposit), ask for a zero-cash lease.

You will still need to prepay your first month’s lease payment AND other minor upfront leasing costs.

Of course, your payments will be a bit higher with no cash down, but you still win with lower overall lease payments (compared to buying the same car).

Are you ready to lease a new car?

One of the best-kept secrets to leasing a car is to use a car-buying service…

It is essentially free (because they get us the absolute lowest price on a new car).

I wrote an entire expose about car-buying services…

Click here to read it.


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Markus Allen

Family man. Truth seeker. Traveler... more about me here...

 


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