How much does the dealer over charge on a lease to make a profit? (Either through raising the rate or lowering the residual)?

A while ago, some who was a banker posted the answer to this, but it is not turning up on the search function.

 

From what I understand, (remember I'm not an accountant). your lease payment is made up of State Tax, Depreciation amount, and the Finance profit or money factor. Typically the APR or the money factor is lower on a lease because you are financing the depreciation amount or "rent", not the full vehicle value of the car. Dealers like leases because they make more money. APR is often lower but not by much plus they get to resale the car at the end of the lease or re-lease or refinance to you. That is my understanding of the process at least. Hopefully that might help a little. [img]/w3timages/icons/smile.gif[/img]

-Jason
Laser Red '03 6MT

 

LOL

i hear its $500 as well...

<font color=green>-Ramb0</font color=green>

 

That was pretty funny. Or not.

Red, thanks for the info, but I am aware of what makes up the lease. In fact, I made an xcel spreadsheet that details a complete lease and how the monthly payment/ downpayment is affected. But what I was trying to find out, was what is the normal markup for a dealer who makes a lease through IFS. For example, a while ago, a banker who is familiar with the loan process posted something like 4 points on an average lease, which seemed very high to me.