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      12-14-2012, 02:09 PM   #13
BavarianFanatic
Too much is never enough
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Drives: Too Many
Join Date: Mar 2008
Location: SE PA

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You treat a lease just like you would a purchase. You first settle on an "acceptable" sale price - ie the mark-up over invoice you're comfortable with. From there, you make sure they're in line with respect to acquisition fee, bank fees etc. Then it's on to the money factor and residual value to make sure those are where they should be. Residual values are hard numbers published by the manufacturer. The money factor is a potential profit center for the dealer which is OK, but just make sure it's not excessive. For reference, multiply the money factor by 2,400 to get the effective equivalent interest rate. In this case, yours would be 4.2% while the base rate is 3.12%. Finally, any taxes and/or cap cost reduction you're looking to put down. At this point, the payment is the payment.

99% of people fixate on the monthly payment without any concept of what they're paying for the car. Never walk into negotiations without knowing the details. It will never end well.