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How do car salesman make money on leases?
Dealers will make the profit from the price the customer agrees on at the beginning and end of the lease. Dealers will also profit from the money factor and any add-ons they sell to the customers. When dealers lease their vehicles, the customers pay the amount of depreciation over the period of the lease.
How do banks make money on car leases?
3. Car Finance Companies Make Money with Leasing. Just like a bank, they make money by charging customers a monthly finance fee. In the case of a lease, it’s called money factor, which is similar to APR (annual percentage rate) interest on a loan.
How do you negotiate a car lease like a pro?
To get the best deal, negotiate the cap cost first, as though you intend to purchase the car outright. In fact, don’t even mention leasing until you and the dealer agree on a price. Once that’s settled, then you can bring up financing options (which include leasing).
What’s money factor on a lease?
The money factor is the financing charge a person will pay on a lease. It is similar to the interest rate paid on a loan, and it is also based on a customer’s credit score. It is commonly depicted as a very small decimal. Multiplying the money factor by 2,400 will give the equivalent annual percentage rate (APR).
Should you put money down on a car lease?
Putting money down on a car lease isn’t typically required unless you have bad credit. If you aren’t required to make a down payment on a lease, you generally shouldn’t. Whether you make a down payment or not, the overall amount you pay doesn’t change. However, putting money down does reduce your monthly payment.
What is a fair money factor for a car lease?
A decent money factor for a lessee with great credit is typically around 3\% to 5\%. If you have fantastic credit and you’re offered a lease with a money factor higher than . 0025 (or 6\% APR) then it may be worth your time to shop around.
How do you determine money factor?
money factor is calculated by taking the actual bank interest rate of the loan and dividing it by 2400, resulting in a decimal based number. For example a car lease with an 7\% loan has a money factor of .