The Truth About Leasing .. The Money Factor

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Title	:	The Truth About Leasing .. The Money Factor
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Honda/Acura is one of the few brands that does NOT allow the money factor to be marked up, for what its worth Other brands allow it to be marked up, which is why some dealers try to hide the money factor on worksheets (I am in the car business)
Comment from : Kevin Brown

I guess I'm not leasing I'll just buy an older, yet reliable car and pay cash No need to give the banks and dealers more money
Comment from : Jamsquad

Thanks but what I don’t understand is why the lease is calculated in a way that the interest is applied to the whole principal and you pay for it every month making it much more expensive than a loan when the interest is payed only on the part that is left on each month Let’s say a car costs 27,000, the residual value is 16,000, the APR for the lease is 6 and you lease it for 36 months My first impression was that it’s the same as taking an 11,000 loan for 36 months with APR 6 But if you take two calculators and go through these numbers, the loan monthly payment will be 33464 and total interest is 1,04704 Whereas if you lease it, the monthly payment is gonna be 41306 and total interest is 3,870… The cost of leasing is 3 times more expensive 🤯I understand, that’s the whole point to make things so complicated that they could get more money from you but still, so frustrating
Comment from : Alex Petrov

Sounds like a lot of fuckery
Comment from : A R

Is the mf based of ur credit and tier approval or what the dealer wants to set
Comment from : Mike Rose

Hey Ari, quick question A dealer told me they use “base money factor” for their lease on a vehicle I’m interested in Is that the same as saying they use the “buy rate money factor”? Thanks!
Comment from : Javier Ceja

oh surprised we need to pay interest on selling price plus residue this is very very weird anyone knows what is the rationale behind that?
Comment from : D

Why does the money factor matter so much when you are agreeing upon a monthly lease amount either it’s around 1 or it’s not why should you dive further?
Comment from : babiblu292

So with that being said, would you actually not want the car to have a high residual value in order to get a lower monthly interest payment?
Comment from : Jacob Peterson

I just got a 2021 Acura ILX A-spec for $2500 down $349 a month Did I get robbed?
Comment from : Jonathan G

It's made confusing on purpose so they can maximize profits with buyers who don't know better
Comment from : Winter 1944

If you don’t stop moving your hands, I am going scream!!!
Comment from : The Photo Booth Chick

Why $2400?
Comment from : oBlvd

Hey Ari, great video Who will determine the APR for my lease? Can I get this before I go in to the dealership?
Comment from : Dave m

Hey ari I’m in the market to buy a 2020 4 runner off rd premium with a market value of $44,702 Selling price $42,225 Called dealer with a estimate on leasing if I put down 13k as a down payment and this I what came out of it : brbr36 months:10,000 miles $12834 per month residual $29,503 brbrAny thoughts on this ??
Comment from : Lydell Leopold

Clear as mud
Comment from : Tracy Hawley

Ari, would you help me with a lease?
Comment from : Jake

All this video did for me was to confuse even more! Sorry
Comment from : chichi41

Блестящий’
Comment from : Moti Nowrangi

ARI!!! You didn’t answer the most important question, CAN A CUSTOMER NEGOTIATE THE MONEY FACTOR with dealership??? Acura has it at 00215 which is about 516 🙀 on leases
Comment from : Caroline Beauty Inc

Hi, is this a good deal for an Audi Q3 2019brMSRP: $44,900brDiscount: $2,700 plus Audi Carebr$0 downbr$619 for 42 months brResidual is around $24,440brMoney factor: 00132brbrThanks in advance sir
Comment from : GMart Mataro

Ari can I email u a copy of my lease contract? I don’t know what the money factor is but I think I got a fair deal
Comment from : Terry Crusin

Can the starting price (MSRP) be negotiated?
Comment from : setofirons Bart

The fact that u pay money for The satisfaction of driving a car u can’t keep isstupid
Comment from : Time traveler

1:30 Ari why is it $2400? Where does this figure come from that it is $2400?
Comment from : Dharma Ram

Ari, I understand most of your explanation However, I didn't hear how "2400" is derived at in figuring out the money factor in the equation Where does it come from? Why that number?
Comment from : 🌵Prickly Pear🌵

could u please do a follow up video with sample numbers, its kinda of hard to quantify all this jargon? thanks 😅
Comment from : sanjan s

When you lease you pay around the same interest as you would with a purchase On a $30,000 vehicle with an interest rate of 399 percent which is a money factor of 001663 on a 36 month lease you will pay around $2,750 in interest On a 60 month loan at 399 percent you will pay interest of around $2,600 during the first 36 months brbrbrThe main reason for this difference is during the lease you will pay less of the $30,000 than you will with a purchase during the same period For example, on a lease you pay the difference between the price (capitalized cost) and the residual value This amount is usually less than the amount of the $30,000 you will pay on a purchase So, essentially, the interest rate (money factor) on a lease is applicable each month to a higher loan amount This results in a bit more interest being paidbrbrbrThis extra interest is usually offset by a lower monthly payment which, again, results from the fact you are paying less of the $30,000brbrbrCar dealers are legally allowed to mark up both the interest rate and the money factor This is called dealer reserve A dealer will shop your credit profile to different sources for an interest rate The financial sources will provide the dealer the rate at which they will finance the buyer This is called the buy rate The dealer can bump this buy rate, by 2 percent in many states So, the financial institution offers a rate of 3 percent The dealer will tell the buyer the rate is 5 percent Guess who gets most of the extra interest? Of course, the dealerbrbrbrDealers can essentially do the same with a money factor The buy rate may be 001663 which is a 399 percent interest rate The dealer can try to convince the buyer the money factor is 002496, which is a 599 percent interest rate brbrbrThis is a scam virtually every car dealer counts on to boost profitbrbrbrWhether you buy or lease always insist the dealer F&I person show you the buy rate If they refuse you can be certain they are pulling the dealer reserve scam In such a situation, walk away If, as has happened to me, the F&I person relents and offers the actual buy rate, fine If not leave as fast as your feet can movebrbrbrOne real scam on a lease is that acquisition fee, usually around $900 This is pure profit for the leasing company This fake fee does not exist on a purchase Leasing companies charge this fee because they know they can hide it in the lower monthly payment
Comment from : Jerry Lundegaard

Interesting video Some written examples of lease vs financing might make your points more effective Still, very interesting
Comment from : Jorge

Thanks for the awesome video Very informative on "what" goes on with price Do you know "why" the APR is divided by 2400 to get mf? What's special about 2400? Also, do you know "why" dealers add residual value and net cap cost to calculate interest payments? Is it because they can or is there some financially sound reason on their end?
Comment from : Eric Bauer

I lease a 2019 Toyota Highlander XLE with a monthly payment of $42900 for 36 months with only first months payment Ari based on this you think I got a good deal Thank You
Comment from : Jose Garcia

Ari , what do you think lease a ram warlock v6 for 319 zero down 10000?l milles 42 months?
Comment from : Hidden HighTec

I leased my 2018 Lexus RC-F last year in Canada $5000 CAD down payment, and my monthly payment is around $927 CAD for 39 months My interest rate for the lease is 02 (my dad works for Lexus/Toyota financial services) My dealer has a 1 year return/buyback pokicy, what do you think? is this a good deal?
Comment from : Seleez

Here is something crazy The 2019 Jaguar F-Type has the single best lease program right now 00001 MF🤑 and up to 60 residuals for 36 months Combined with some pretty heavy discounts because the 2020 models are out now It looks like you might be able to get into a $75k car for about $600 a month with absolutely nothing down
Comment from : LearningFast

Amazing content Ari Your insight in leasing a car is totally on point 👍
Comment from : A Sam

I’m looking to get into a c300 lease within the next few months, any way you could possibly do a video to help get the best deal possible on a lease from like May-June of this year is
Comment from : Jarar Hussain

Hey Ari can you do a video about purchase/lease on Jeep Grand Cherokee SRT? I think it doesn't have good residual value but I still hear many people leasing them Wonder if Chrysler has lease rebate or something like that on this car?
Comment from : Kyle Yu

I leased a 2018 Acura MDX last fall I pay $459 per month $500 down Did I get robbed?
Comment from : DG

Can you do a video about the 2019 scatpack challenger widebody lease?
Comment from : Le King

I believe Dave Ramsey said it best, leasing is the most expensive way to finance a car Unless there is a bunch of lease cash offered by the manufacturer
Comment from : PR M5

Hey Ari when are you doing a video on the new BMW 3 series!?
Comment from : Chris X

Do you think is better to lease 2019 Jeep Grand Cherokee trackawk or buy
Comment from : Chief Stephan

I just try to get a lease on a lexus they said $4k down smh im gonna try to see Volvo im trying to stay on the $400 mark You think a Volvo XC40 is possible?
Comment from : I2esistanc3

Could you do a video about buying a car at lease end? I’m sure that in the long run you would pay more, but how much more? As a suggestion, maybe use the lexus NX as an example
Comment from : SkylineR34EvoX

Hi Ari, I'd like to thank you for all the hard work and these super informative videos I was wondering if you can help me and take a look at my resent lease structure? I'd like if you could point out for me, if i did any mistakes and or if I need to learn anything to look out for when I get my next car? Could please let me know how I can send you the information please Many thanks
Comment from : Yacoub Arafat

Ari, I went into a Mercedes dealership in LA today, and I got quoted 490 something with 4500 down and 770 credit what do you think
Comment from : Nicolas Zaroyan

Video on jaguar XE S AWD
Comment from : Anthony

I'm a new subscriber(about a week) I love your channelI have never leased a car and been thinking about going this direction,on a scatpack charger
Comment from : Frankie 072

Well done! My favorite part of your videos, aside from the great information, is when you bury the "please consider subscribing" in the middle of the videos It's awesome! Keep them coming! Mind doing a BMW X3 M40i?
Comment from : EJ Harris

Would like to have a lease review video on a Cherokee Trailhawk if possible Explaining the money factor was extremely helpful, thank you
Comment from : Neil Watson

I got a 2019 Mazda CX-5 Grand Touring AWD with 0 down for 319/Mo after paying first month taxes and fees Did I get robbed?
Comment from : FromQnz2King

Is there a way to get the MF at any point in time Let’s say I call 2 different dealer ships and ask for the MF on the same model car and trim Am I likely to get the same answer? And how to I know I’m getting the best rate possible?brbrSorry for all the questions , just interested in how brokers get their residuals and MF on vehicles as I know it varies from location to location as well
Comment from : ChristianTheLad