People are a little wary of leasing because it has a whole alternative set of terminologies ... and it makes your head spin.
But actually, all these terms have a pretty easy definition. ‘Capitalized cost’ is basically what you’re paying for the car, and the ‘money factor’ is basically the interest rate ... .
They’ll say ... ‘What’s your monthly budget? How much can you spend a month?’, and that’s a really dangerous path to go down ... .
If you come in to buy a car, and you say ‘Oh, I just can’t afford that monthly payment’, they’ll say, ‘Well how about a lease?’ And then they’ll play tricks with the lease; they might extend the time period out to get your payments down.
But in buying as in leasing, the thing to do is separate the transactions. And if you know that you’re coming in to lease, besides getting up to speed on the terminology, you don’t let your guard down when you’re negotiating the price of the car.
Mark Solhem
Kiplinger.com
Senior Editor for Kiplinger's Personal Finance Magazine
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Sincerely,
Michelle