Is it better to lease or buy a car?

Leasing offers lower monthly payments and the ability to drive new cars every few years, but you never own the vehicle. Buying costs more monthly but builds equity. Lease if you want new vehicles often, drive under 12,000 miles/year, and prefer lower payments. Buy if you drive a lot, keep cars long-term, or want to build equity.

What is money factor in a lease?

Money factor is the lease equivalent of interest rate. Convert to APR by multiplying by 2,400. For example, money factor of 0.00125 equals 3% APR. Lower money factors mean lower monthly payments. Good credit scores qualify for better money factors. Always ask for the money factor and negotiate like you would an interest rate.

What happens if I go over my lease mileage?

Exceeding your mileage allowance (typically 10,000-15,000 miles/year) costs $0.15-$0.30 per mile. Going 5,000 miles over at $0.20/mile costs $1,000 at lease end. Estimate your annual mileage honestly and purchase additional miles upfront if needed—it's cheaper than paying overages later. Consider buying instead if you drive significantly more than lease allowances.

Can I negotiate a car lease?

Yes! Negotiate the capitalized cost (vehicle price), money factor (interest rate), and residual value. Also negotiate trade-in value and fees. Don't focus solely on monthly payment—dealers can manipulate terms to achieve desired payment while costing you more overall. Research fair market value and competitive money factors before negotiating.

Finance

Car Lease Calculator

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Money Factor Tip

Money Factor is just another way to express interest rate. Multiply your Money Factor by 2400 to get the approximate APR.

Current MF 0.0025 × 2400 = 0.00% APR