What Your Car Lease Really Costs: Five things to know:
, and the number goes up for luxury shoppers. For example, more than half of all retail buyers chasing a new BMW, Mercedes-Benz, or Lexus drive off in a leased vehicle. And while financing is a relatively straightforward process, leasing is not. Here’s why.all the time. A $399-per-month rate draws 3-series buyers in like the tide. What about that Civic for only $99 per month and $2999 down? It’s all possible, at least in theory.
Willing to wait for a car at the advertised price? Good luck convincing a dealer to special order a leased car. Many lease specials require taking delivery from dealer stock, and if they don’t, by the time your special order arrives, the deal may have expired. Some manufacturer deals also require an unpublished “dealer contribution”—a discount that lowers the MSRP—that not all dealers have to honor. Surprise! Out comes a higher lease payment.
The answer is the money factor. The base Jag had a .00238 money factor, while the S was at .00113. Convert these numbers to equivalent APRs and it all makes sense. One lease wanted to charge you 5.7 percent, while the other was charging only 2.7 percent.
Of course, as with any interest rate, only customers with the best credit scores qualify for the lowest money factors, except there’s another catch. Just as they can with financing, a dealer can legally write you a higher money factor and refuse to disclose the exact rate calculated by the automaker’s bank.
So is the sales tax—and this can vary more widely than you’d think. Until recently, Illinois required car dealers to collect tax based on the full purchase price, not the depreciated cost a lessee actually pays. In Connecticut, there’s a luxury tax for any vehicle priced over $50,000 that tacks an additional 1.4 percent onto the bill. We’re not saying you should register your car in New Hampshire, but it pays to review your state’s tax laws.
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