“MONEY FACTOR” IS THE INTEREST RATE ON A LEASE.
DEALERS CAN LEGALLY MARK-UP THE MONEY FACTOR, WHICH INCREASES THE INTEREST TO YOU AND RAISES THE PROFIT FOR THEM BY THE SAME AMOUNT IT RAISES YOUR INTEREST
“MONEY FACTORS” are written as decimals 0.001 = 2.4% Converting a MONEY FACTOR to an A.P.R. % Rate is SIMPLE just multiply times 2400 Thus 0.001 x 2400 = 2.4% APR.
Car Dealers can mark-up the MONEY FACTOR “Buy Rate”. That is if the bank or leasing company is selling the money to the car dealership for 0.001 and they want to mark it up they can add up to 300 basis points or a FULL 3% APR and create a very large profit for themselves. The “buy rate” of 0.001 + 0.00125 (0.00125 x 2400 is 3.0% APR) = 0.00225 selling rate. 0.00225 x 2400 = 5.4% APR. Exactly 3% over the “buy rate”.
If the vehicle is a $50,000 vehicle and the Lease is 3 years, then the additional interest charge would be approximately $3,600 or about $100 extra per month WHICH IS PURE PROFIT, AND GOES DIRECTLY TO THE CAR DEALERSHIP…..
The extra $100 a month is paid directly to the dealership UPFRONT from the bank or leasing company in the form of a check for approximately $3,600.00
This is called a “LEASE RESERVE”.
Do you understand everything we have been talking about in the above paragraph?
If you do NOT understand everything, and I mean everything!
YOU NEED A PROFESSIONAL AUTOMOBILE SALES MANAGER TO REPRESENT YOU AND YOUR BEST INTERESTS IN NEGOTIATING A NEW CAR LEASE
WITH A NEW CAR DEALER. IT IS CHEAPER THAN YOU MIGHT THINK.
There are many more ways of increasing the profit on a Lease deal then you can imagine. Double Charging Fees is very common place in the car business. It is done so eloquently that you will never know it happened. The only way to know for sure is to look a the capitalized cost of the vehicle and match it up with the selling price.
If you do not understand EACH DOLLAR AMOUNT on the Lease contract you will NEVER BE ABLE TO KNOW!
This is exactly why the Consumer is overcharged when buying or leasing a new vehicle.
The Consumer does not understand the contract BUT SIGNS IT ANYWAY, NOT A SMART MOVE!
You need a professional automobile sales manager with 33 years experience, protecting your interests, to read and understand every dollar amount on the contract.
I will explain to you each number on the contract. You will absolutely know exactly what you are paying to buy or lease the automobile.
FULL DISCLOSURE of the Lease or Finance Contract by YOUR VERY OWN PROFESSIONAL NEGOTIATOR who explains everything to you in great detail.