How To Lease a Car Like A Grown Up Person

Posted By Cyrus Navid on 5/29/15 8:19 AM


So, you're really coming up in the world. You got a real job and you're pretty familiar with the fact that business casual means Banana Republic. The trouble is, all your coworkers have fancy cars and you're rocking your Jetta from college. 

It's totally possible your boss will need to be driven out to lunch, you'll need to take clients out, or you're just really not into driving around with the check engine light flashing at you. So what should you do?

The flashy route: lease a new car baby!

Haters will say that leasing is stupid, that you're just throwing money down the drain, blah blah blah, I-can't-hear-you-over-the-sound-of-my-Audi-S4's-turbo-six! While leasing does offer you the ability to drive more car for your monthly payment, it's really all about where you're at in life. 

  • Are you cool with limiting your driving? Most leases cap your mileage at 12,000 miles a year; AKA, only one trip to Vegas in your luxury sports coupe per summer?

  • Do you think you'll die if you drive a Honda Civic?

  • Do you think you'll get rid of your car in two years anyway?

Ok, if you answered yes to all of the questions above, well then, leasing is the way to go. Here are some terms you'll need to Google before you walk into the dealership to lease a car:

  • Money Factor - The dealership is going to make money off you no matter how you pay. In leasing, the price you pay for credit is called the Money Factor. It's basically the interest rate. The money factor is always expressed as a stupid-tiny number, such as .00281. To convert to an equivalent annual interest percentage rate (APR), simply multiply by 2400. So in this instance the money factor is 6.74%, pretty darn high!
  • Residual - This is the amount of money still owed on the loan (leasing is basically a loan) after the lease is over. For example, if the car has a residual of $14,000 at the lease end, then this amount would need to be handed over to the dealer to make the car yours. You want this number to be as high as possible. 
  • Amount Due at Signing - This is the amount of money you need to fork over to get into the lease. When you see those commercials that advertise "lease the 2015 IS 250 for $289 a month for 36 months" the small print probably says "$4,899 due at signing." So, make sure you have a chunk of change ready to start the lease.
I have no opinion on which is better, leasing or buying. It's like "should I wear black pants?" No clue, you'll need to do some soul searching on what's motivating you to get a new car. But if you thoroughly understand the above critical terms, you'll be in a better position to negotiate a lease. 

Image Credit: Forza Horizon 2 on XBox One