What are the three key elements to keep in mind when arranging for a lease?
First and foremost, the adjusted capitalized cost, or adjusted actual cost, is determined and put to use. This will expose the numbers for the real purchase price after the down payment, incentive discount, and trade-in credit are all monetarily deducted from the actual, capitalized, cost. During this process, any other fees or charges are added to the balance. Second, the estimated value the vehicle will hold at the end of the lease, or the residual value, is determined and then subtracted from the adjusted capitalized cost. This procedure yields a depreciation figure to be taken into account. The length of the agreement, estimated mileage to be consumed, and make/model of the vehicle are the factors taken into consideration in determining a vehicle’s residual value. Finally, the money factor comes into play. The money factor is merely a number that correlates with the cost of borrowing money during the lease period. A leaser assesses the money factor at this point, and structures the
