Money Factor

June 2008 Lease Rate for 08 Audi A4 Avant

Published by G

Audi A4 2.0T SE quattro Avant
24 Month – Residual 57% of MSRP – .00023 Base Rate
36 Month – Residual 49% of MSRP – .00023 Base Rate
48 Month – Residual 43% of MSRP – .00282 Base Rate

* Residuals posted are for 15K miles/year. Add 2% to Residual for 12k mi/yr and 3% for 10k mi/yr on all terms
** Rates provided by Tarry Shebesta from Leasecompare.com

My Take: The Avant is pretty much a fancy word for “Wagon”. If there is a wagon worth getting though, its the A4 (the S4 would be ideal). I’m rather surprised how low the residual value of the Avant is for 36-months. It barely cracks 50% in 36months (based on a 12k mile/yr lease). I guess Audi Financial Services’ low money factor helps keep the price reasonable, but I’m still expecting a $500+ monthly payment plus inception fees.

June 2008 Lease Rate for 08 Honda Civic Si

Published by G

2008 Honda Civic Coupe Si
24 Month – Residual 66% of MSRP – .00165 Base Rate
36 Month – Residual 58% of MSRP – .00165 Base Rate
48 Month – Residual 48% of MSRP – .00235 Base Rate
60 Month – Residual 37% of MSRP – .00245 Base Rate

* Residuals posted are for 15K miles/year. Add 2% to Residual for 12k mi/yr and 3% for 10k mi/yr on all terms
** Rates provided by Tarry Shebesta from Leasecompare.com

My Take: Now is a great time to jump into a Honda Civic Si coupe. The residual values are strong and the lease rates for 24 to 36 months are lower than the standard Honda lease rate. If you can’t drive a manual, learn, because this car only comes in manual. This is probably one of the best/quickest/fuel efficient car of its class.

June 2008 Lease Rate for 08 Honda Element

Published by G

Element EX
24mo/12k – Residual 60% – Money Factor .00350
36mo/12k – Residual 54% – Money Factor .00250
48mo/12k – Residual 45% – Money Factor .00235

Element LX
24mo/12k – Residual 63% – Money Factor .00350
36mo/12k – Residual 56% – Money Factor .00250
48mo/12k – Residual 47% – Money Factor .00235

My Take For those outdoorsmen(women) out there, you may want to hold out for better rates on the Element. There currently isn’t any lease support for these models. I personally like this car more than the Scion xB (which is really ugly in my opinion). It’s not to say that the Element is pretty, it’s not. However, Element is versatile and spacious and it comes in 4WD, which makes a it a decent alternative to compact SUVs.

June 2008 Lease Rate for Mazdaspeed3

Published by G

Mazdaspeed3 GT 4dr Hatchback
24mo/12k – residual 63% – money factor .00304
36mo/12k – residual 53% – money factor .00319

My Take: As much fun as a Mazdaspeed3 would be to drive. The lease rates and residual values seem to be as bad as can be. There are better options out there, but if you have to have this car. Maybe wait until next month to see if Mazda American Credit will introduce better money factors. These are “limited edition” rides, so there is a chance the numbers won’t look better. Hope you’re not in a hurry.

Don’t Negotiate Monthly Lease Payments

Published by G

I’ve been noticing a very disturbing trend on automotive forums. Many folks keep asking the “experts” about whether their “quote” is a good deal or not. The truth is, there is no way to find out whether a lease is a good lease if the sale price, money factor and residual value aren’t provided. Folks, let me remind you that a “good deal” is rather subjective. Depending on where you live, a good deal could be $100 more than some or $100 less than others since the sale prices/taxes vary from state to state. Cities with a lot of dealership competition will usually get you the “lower” prices, while cities with little or no competition will usually make you pay more. Basic economics.

Another thing I’ve been noticing is that people seem to only understand leasing in terms of “monthly payments” and “money down”. There IS a reason why leases have a sale price, residual value and a money factor and that is because they are used to calculate your monthly payments. So don’t waste time negotiating a monthly payment when you should be negotiating the sale price. The Math doesn’t lie, as long as you know what the numbers are used to calculate your monthly payment, you will secure the lowest possible monthly payment. Here’s a simple explanation of what makes up your monthly payments.

Your monthly ease payment generally consists of 3 parts:

1) Depreciation Fee
2) Finance Charge
3) Taxes (This one may vary depending on which state you live)

CLICK HERE to see the Lease Formula and a sample calculation of a lease payment.

DEPRECIATION FEE – This fee is the difference between the sale price and the residual value of the vehicle. In order to minimize this fee, you need to hammer out the lowest SALE PRICE possible. Ideally you want to shoot for invoice price (what the dealer pays) or lower because it will lower your monthly payments. The ability to get invoice will depend on the model you plan to get. Chances are, you won’t be getting a Hybrid at invoice.

FINANCE FEE – The finance charge is what the bank charges you for borrowing money to lease the car you want. This is calculated by adding the SALE PRICE and the RESIDUAL price and multiplying it by the MONEY FACTOR. As you can see, everything is based on the SALE PRICE, RESIDUAL VALUE and the MONEY FACTOR. This is why I stress the fact that if you plan to lease a car, you need to know these three numbers.

TAXES – In most states you will be assessed a tax for the depreciation and finance portion of your monthly payments (which I consider to be the better states to lease from). In other states (IL, TX for example) you will be charged taxes on the entire amount of the vehicle, not just depreciation, thus making lease a really bad deal in those states. Since sales taxes are manage by state governments, a “good lease deal” really varies from state to state.

To know what a good deal is, you need three things: SALE PRICE, RESIDUAL, MONEY FACTOR, with SALE PRICE being the only thing you can negotiate since RESIDUAL and MONEY FACTOR are set forth by the lending bank and it depends heavily on the lease term you choose and the credit score you have.

I don’t recommend folks with low credit scores to lease because a good deal can turn UGLY if dealers find out your score is less than ideal. What is a good credit score that will qualify you for the best rates? It is generally a credit score of 700 or more (some lenders may require higher scores). Don’t go into a dealership not knowing your credit score, specially if you don’t like surprises.

Again, I don’t want to sound like a broken record, but make sure you negotiate the sale price of the vehicle first and foremost. You don’t even have to tell the dealer you plan to lease, just ask for the rock bottom price and cross check that number on websites such as Edmunds.com to see how close to invoice price it is. Once the sale price is ironed out, your payment should be surprisingly lower than initially quoted.

June 2008 Lease Rate for 08 Mitsubishi Lancer Evolution GSR

Published by G

2008 Mitsubishi Lancer Evolution GSR Sedan
24 Month – Residual 65% of MSRP – .00250 Base Rate
36 Month – Residual 56% of MSRP – .00260 Base Rate
48 Month – Residual 47% of MSRP – .00260 Base Rate
60 Month – Residual 42% of MSRP – .00330 Base Rate

* Residuals posted are for 15K miles/year. Add 2% to Residual for 12k mi/yr and 3% for 10k mi/yr on all terms
** Rates provided by Tarry Shebesta from Leasecompare.com

My Take: Insuring an Evo can get pretty costly, so think long and hard before tying yourself down with one of these as your “daily” driver. If you haven’t already, check out L’s Mitsu Evo. This thing flies, which is why L drives around in a Mazda 626 and uses his Evo as a part time driver. If I were to get an Evo, I wouldn’t lease one, I’d buy one. The lease rates aren’t that great, plus if you get one, you would probably want to modify it.

June 2008 Lease Rate for 08 Mercedes Benz R-Class

Published by G

2008 Mercedes R320 CDI RWD Wagon
24 Month – Residual 60% of MSRP – .00130 Base Rate
36 Month – Residual 50% of MSRP – .00160 Base Rate
48 Month – Residual 42% of MSRP – .00160 Base Rate
60 Month – Residual 39% of MSRP – .00330 Base Rate

2008 Mercedes R350 RWD Wagon
24 Month – Residual 56% of MSRP – .00060 Base Rate
36 Month – Residual 48% of MSRP – .00090 Base Rate
48 Month – Residual 36% of MSRP – .00090 Base Rate
60 Month – Residual 33% of MSRP – .00330 Base Rate

2008 Mercedes R350 4matic Wagon
24 Month – Residual 58% of MSRP – .00075 Base Rate
36 Month – Residual 49% of MSRP – .00105 Base Rate
48 Month – Residual 37% of MSRP – .00105 Base Rate
60 Month – Residual 34% of MSRP – .00330 Base Rate

* Residuals posted are for 15K miles/year. Add 2% to Residual for 12k mi/yr and 3% for 10k mi/yr on all terms
** Rates provided by Tarry Shebesta from Leasecompare.com

My Take: The residual value for the R-Class is rather sad. It’s a wagon after all, what can I say. One look at the Dodge Magnum sales figures and you will understand why wagons are not popular these days. This is reflected in the residual values of the R-Class. MB seems to be offering very good money factors to offset the cost of having to pay over 50% of a R-Class in 36 months. My only recommending here is not to lease the R-Class. In our times, the crossover SUV’s is where it’s at. SUV cargo space, 5+ adult seating, fuel efficient (compared to larger SUVs) and optional 4×4, even if you don’t need it. It’s like having your cake and eating it too.

June 2008 Lease Rates for 08 BMW 1, 5, 6 and 7 Series

Published by G

I’m posting all of the lease rates for all remaining 2008 BMW models/trims. I’ll probably start doing this since it will get the rates out quicker than posting them one model at a time.

2008 BMW 128i Coupe
24 Month – Residual 75% of MSRP – .00263 Base Rate
36 Month – Residual 61% of MSRP – .00263 Base Rate
48 Month – Residual 49% of MSRP – .00263 Base Rate
60 Month – Residual 40% of MSRP – .00263 Base Rate

2008 BMW 128i Convertible
24 Month – Residual 73% of MSRP – .00263 Base Rate
36 Month – Residual 60% of MSRP – .00263 Base Rate
48 Month – Residual 47% of MSRP – .00263 Base Rate
60 Month – Residual 38% of MSRP – .00263 Base Rate

2008 BMW 135i Coupe
24 Month – Residual 70% of MSRP – .00263 Base Rate
36 Month – Residual 57% of MSRP – .00263 Base Rate
48 Month – Residual 46% of MSRP – .00263 Base Rate
60 Month – Residual 38% of MSRP – .00263 Base Rate

2008 BMW 135i Convertible
24 Month – Residual 72% of MSRP – .00263 Base Rate
36 Month – Residual 59% of MSRP – .00263 Base Rate
48 Month – Residual 46% of MSRP – .00263 Base Rate
60 Month – Residual 37% of MSRP – .00263 Base Rate

2008 BMW 528i Sedan
24 Month – Residual 67% of MSRP – .00220 Base Rate
36 Month – Residual 55% of MSRP – .00220 Base Rate
48 Month – Residual 37% of MSRP – .00263 Base Rate
60 Month – Residual 30% of MSRP – .00263 Base Rate

2008 BMW 528xi Sedan
24 Month – Residual 66% of MSRP – .00220 Base Rate
36 Month – Residual 55% of MSRP – .00220 Base Rate
48 Month – Residual 36% of MSRP – .00263 Base Rate
60 Month – Residual 29% of MSRP – .00263 Base Rate

2008 BMW 535i Sedan
24 Month – Residual 66% of MSRP – .00200 Base Rate
36 Month – Residual 55% of MSRP – .00200 Base Rate
48 Month – Residual 37% of MSRP – .00263 Base Rate
60 Month – Residual 30% of MSRP – .00263 Base Rate

2008 BMW 535xi Sedan
24 Month – Residual 65% of MSRP – .00200 Base Rate
36 Month – Residual 55% of MSRP – .00200 Base Rate
48 Month – Residual 36% of MSRP – .00263 Base Rate
60 Month – Residual 29% of MSRP – .00263 Base Rate

2008 BMW 535xi Wagon
24 Month – Residual 65% of MSRP – .00200 Base Rate
36 Month – Residual 55% of MSRP – .00200 Base Rate
48 Month – Residual 31% of MSRP – .00263 Base Rate
60 Month – Residual 25% of MSRP – .00263 Base Rate

2008 BMW 550i Sedan
24 Month – Residual 65% of MSRP – .00220 Base Rate
36 Month – Residual 55% of MSRP – .00220 Base Rate
48 Month – Residual 31% of MSRP – .00263 Base Rate
60 Month – Residual 24% of MSRP – .00263 Base Rate

2008 BMW M5 Sedan
24 Month – Residual 68% of MSRP – .00263 Base Rate
36 Month – Residual 55% of MSRP – .00263 Base Rate
48 Month – Residual 37% of MSRP – .00263 Base Rate
60 Month – Residual 28% of MSRP – .00263 Base Rate

2008 BMW 650Ci Coupe
24 Month – Residual 66% of MSRP – .00195 Base Rate
36 Month – Residual 56% of MSRP – .00195 Base Rate
48 Month – Residual 37% of MSRP – .00263 Base Rate
60 Month – Residual 31% of MSRP – .00263 Base Rate

2008 BMW 650CiC Convertible
24 Month – Residual 68% of MSRP – .00195 Base Rate
36 Month – Residual 58% of MSRP – .00195 Base Rate
48 Month – Residual 38% of MSRP – .00263 Base Rate
60 Month – Residual 31% of MSRP – .00263 Base Rate

2008 BMW M6 Coupe
24 Month – Residual 69% of MSRP – .00250 Base Rate
36 Month – Residual 58% of MSRP – .00250 Base Rate
48 Month – Residual 43% of MSRP – .00263 Base Rate
60 Month – Residual 35% of MSRP – .00263 Base Rate

2008 BMW M6 Convertible
24 Month – Residual 69% of MSRP – .00250 Base Rate
36 Month – Residual 58% of MSRP – .00250 Base Rate
48 Month – Residual 43% of MSRP – .00263 Base Rate
60 Month – Residual 35% of MSRP – .00263 Base Rate

2008 BMW 750i Sedan
24 Month – Residual 64% of MSRP – .00190 Base Rate
36 Month – Residual 54% of MSRP – .00190 Base Rate
48 Month – Residual 31% of MSRP – .00263 Base Rate
60 Month – Residual 25% of MSRP – .00263 Base Rate

2008 BMW 750Li Sedan
24 Month – Residual 64% of MSRP – .00190 Base Rate
36 Month – Residual 54% of MSRP – .00190 Base Rate
48 Month – Residual 31% of MSRP – .00263 Base Rate
60 Month – Residual 25% of MSRP – .00263 Base Rate

2008 BMW 760Li Sedan
24 Month – Residual 51% of MSRP – .00190 Base Rate
36 Month – Residual 41% of MSRP – .00190 Base Rate
48 Month – Residual 28% of MSRP – .00263 Base Rate
60 Month – Residual 23% of MSRP – .00263 Base Rate

2008 BMW Alpina B7 Sedan
24 Month – Residual 54% of MSRP – .00190 Base Rate
36 Month – Residual 44% of MSRP – .00190 Base Rate
48 Month – Residual 33% of MSRP – .00263 Base Rate
60 Month – Residual 27% of MSRP – .00263 Base Rate

* Residuals posted are for 15K miles/year. Add 2% to Residual for 12k mi/yr and 3% for 10k mi/yr on all terms
** Rates provided by Tarry Shebesta from Leasecompare.com

My Take: At first glance, the 5-series, 6-series and some of the 7-series have decent residual values along with lower money factors. At least they are much better than what Mercedes Benz is currently offering. You might want to hold out on the 1-series still. The residual values are strong, but the money factors are still too high in my opinion. Hopefully they start to drop some after the summer.