Basics of Car Leasing tips

Basics of Car Leasing tips from Alfa Romeo USA of Larchmont.

When it comes to leasing a car, potential leasers always look for the best possible deal without actually understanding lingo and terminology associated with it. Having a clear insight regarding these terms can be used to your advantage.

Take a look:

Capitalized Cost

This is essentially the reduced selling price used by the dealer to calculate your monthly payment. If it is a good lease deal, the capitalized cost is significantly lower than the MSRP. A lower capitalized cost or cap cost gives you a lower monthly lease payment.


This term stands for Manufacturer’s Suggested Retail Price, which is a marked up version of the invoice price (paid by dealer to manufacturer to put the car on the lot). Compare the MSRP of a vehicle to its invoice price to see just how low of a selling price is possible. The selling price is the negotiated price the dealer uses to compute your monthly lease payment.

Residual Value

It is the dollar amount or percentage that represents the projected value of a car after a specific number of months or years. When looking for a car to lease, you should always seek cars with high residual values. Cars with higher residual values have lower monthly payments.

Cap Reduction

The cap reduction is the sum of money you pay at the time of signing a new lease deal in order to reduce your selling price. While it is true that you are putting this money “down”, you shouldn’t confuse the cap reduction with the down payment because the down payment is generally the sum of the cap reduction and other fees such as tax, licensing, and registration fees. The cap reduction is the specific amount of your down payment that is being used to reduce your capitalized cost and therefore reduce your monthly payment.

Money Factor

The money factor is the interest rate in leasing terms. The money factor should be a small numeric figure comparable to the interest rates available for auto loans. You should know how to convert money factors into interest rates to give you an idea of how much the dealer is charging you in finance charges for your lease.

Now that you know more about leasing cars and related terminology, it will be of good use when you actually consult a dealership – you can get a car in good condition at reasonable rates that is well within your budget

Are you or anyone in your family looking for a new, or used car head on over toAlfa Romeo USA of Larchmont . Not only do they have a great selection of vehicles they will make sure they help you in every way they can

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