leasing a car

Your friend is too young to lease a car. Tell him he should wait five years!

 

LOL! As a matter of fact, it is!!!!!

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Beat them up on the cap and the money factor.

 

do research om edmunds.com for leasing. I did it for the business and was almost to the penny when i made the deal.

 

no problem. If you need additional info let me know.

 

See?

 

You don't get what?

 

Take two
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MSRP is used by bank to determine residual value...as you would expect, every bank has it's own residual rate based upon lease term (Imports tend to have better residual rates than domestic cars). Your friend wants to find the highest residual rate as possible for the term he wants to lease (residual = the amount the bank determines is the value of the car at the end of the lease and what your friend isn't paying if he walks away from the lease at the end of the term.) Example: $40k MSRP @ 50% residual @ 5 years = $20k residual. Most people lease cars that are fully loaded because the extras are residualized so they are only paying for a portion of the extras in the monthly payments instead of the entire cost of the options.

The monthly payment for the car is based upon the capitalized cost of the car. Cap cost should be relative to what you would be paying for the car regardless of the method of finance - cash, loan, or lease. Let's say invoice on is $35k and your friend negotiates $1k over invoice as his cap cost. In the same example as above, payments would be based upon $36k minus the $20k residual, divided by the term, plus the money factor (equivalent to interest on a conventional loan), plus fees (depending upon the bank, licensing can be rolled into the lease), plus tax on the monthly payment (depending upon what state you live in).

Hope that helps. I used to write auto leases for a living so pm me if you have any more questions.