Hey guys.....new to the forum....basically working a deal on a G35 sedan and just had a couple of questions.

I've never leased before but after having 4 or 5 cars traded in and being upside down, I decided to try leasing. BTW - this is in TX where we have to pay all the tax from what I understand even on a lease.

My question is where do residual values come from and can they be negogiated? Same question with money factor? My credit is sub-par (~670) with some spots here and there. What should I expect as far as a money factor?

thanks guys

-Tommy

 

Residual Value is determined by the company based on many different factors. It is basically a guess of what the value of a vehicle will be under certain circumstances (ie. mileage, age, condition of vehicle) Of course this may be different from reality when other factors are involved, like escalating gas prices. It cannot be negotiated, but the Cap Cost can be. It is the same as the MSRP on a purchase. A lease will allow you to drive more car for the same money although your insurance will probably be higher. Also, you can hide a lot of "upside down" money when you choose to lease. Just make sure the Cap Cost is agreeable to you. Some dealers will try to hook you on a payment price rather than the total Cap Cost which they may make even higher than the MSRP.

 

The negotiated price of the car was $300 over invoice and they are giving me a fair deal on the trade-in. They have the payment about where I want it but trying to figure out if there is anymore wiggle room with the other numbers, that being residual and money factor. I was looking on leasecompare and residuals seemed to be different for different banks and that's why I was wondering if they were negiable?

thanks again guys.........


BTW - how do you calculate cap cost?

 

Two Capitalized cost --

Gross cap cost, which is agreed upon value of the vehicle(selling price) plus fees like aquisition fees, service/maint contract, prior balance(roll over from your last contract).

Adjusted cap cost, which is gross cap cost plus sale tax, DMV fee, first payment, security deposit...ect, and minus any money out of your pocket(down payment) or trade-ins.

Generally speaking, the residual value arent negotiable, however most of lending companies set their own residual or resale value, but they usually only varies slightly between them, maybe 2~3%. The money factor on other hand is "adjustable", but you dont really "negotiate" on it, it will depend on your credit history to a point and after that, it will depend on dealership's greediness.