Guiness let me help with some additional information.

First, in my opinion, LEASE your daily car UNLESS:
1) You put EXCESSIVE mileage on your car
2) You put very little mileage on your car
3) You plan to mod
4) You don't like being commited to a predetermined contract.

The formula I use is,
BUY my Garage queen and LEASE the daily driver.

Second, the "MONEY FACTOR", is just a bullshit way of saying, INTEREST RATE. But the sales people use it as a way to confuse people. They say something like, the money factor is only 3.2, making people think the interest rate is only 3.2%. But that's a hook. Like Chinaman said, multiply that by 2400 and you get the REAL rate, which at 3.2 (or .0032) it really is a 7.68% interest rate. And in my experience, if you let a salesperson know, you caught him trying to bullshit you with a 3.2 lie, you can beat the hell out of them by letting them know they tried to deceive you.

Know, lets talk about the most important thing: COST OF OWNERSHIP.. In my experience, the best COI depending on factors, is the lease. As said, in part 1, if you fall under those paramaters, it costs less to lease then to finance. The number one reason being, you are only paying sales tax on the part of the car you actually borrow, rather than on the full purchase price, and that's thousands of dollars on a high priced car.

Do not do CAP reductions, it's a waste. As Chinaman said, you don't get it back if car is stolen.

Generally, with a lease, you are paying about .15-.17 mile. If you go over mileage, you pay .20. It's really not a big diffenece in price if you do the math. See, people get upset because they think, if I go over, I'm being raped at .20 mile. But if you buy 15000 miles vs. 12000 miles, those 3000 miles are costing approximately .16 cents. So if you go over, your paying a .3 cent penalty per mile. NOT A .20 cent per mile penalty.
So if you put on 3000 extral miles, it's going to cost you $600. Which is only about a $90 difference if you had prebought those miles.
And even if you owned the car, you would be penalized on over miles when you tried to sell it. So one way or the other, you pay for what you drive.

Also, when you go to negotiate a lease, there are certain things you can and can not negotiate. The purchase price of the car is the first and most important thing. Don't tell your salesman you plan to lease until after you have agreed on the purchase price. You do not want to lease a car based off MSRP when you can get them down $4k on the price. If you get them down $4k, you save, approximately $1800 on the lease payments (figure 1/2 of the discount, is savings in your pocket.)
Now, the money factor is another area you can negotiate. You usually can't beat the "FACTORY DEAL", but what the finance managers don't tell you is, they are not always offering you the best "Factory Deal." - Often, they try to "Tax" you with points, that they put in their pocket.
So it's important to know exactly the best deal the factory offers based on good credit. You can usually find the information on the net, on www.leasecompare.com or something of that nature. I have found, almost every time I have gone to lease, some dealer has tried to throw on extra points.
So what I do now is, when I go to buy the car, is, I LAY OUT THE TERMS for the dealership. Very simply I say, I am willing to pay X for this car. I know the residual is preset by factory at 62%, and I also know that BMW is offering a money factor of 7.25%. Since the purchase price I am willing to pay is ($500 over invoice), I hav e broken down the numbers on 3 different lease calculators on the internet, and here are the figures.... This is the most I am willing to pay, or I will take my business to your competitior.

It always works.... I always find a car at the price I reasonably want.
There are two types of customers. 1) The customer who overpays on everything. 2) The customer who gets everything at near cost and is considered a "VOLUME" sale. They know they are not going to make hords of money on every car, but they still need to sell a monthly quota. I am happy to know, I am always a VOLUME customer. As such, I sometimes have to take my business a few towns over, but that's ok with me.

Just one small point, the numbers you get from a lease calculator can sometimes vary 10-15 month depending on how people factor reg fee, acq fee, title, etc. So don't be surprised if the numbers are a little off, they just need to be within a couple bucks of another.

Again, I can't state this loud enough. When you go to buy a car, YOU SET THE REASONABLE TERMS. Tell them, that's what you want, it's what you'll pay, or go elsewhere. I get outrageous deals on cars and I do this for my friends and family all the time. Sometimes I have to drive 45. min to get the car, but who cares if I save $5K.

Also, negotiate EVERYTHING over the phone. Fax the numbers, do NOT GO IN. Unless it is for your initial test drive. Have your computer, your calculator in front of you and make sure there are no surprises by having all your numbers, papers and calculations in front of you.
I will not step foot into a finance managers office until ALL the terms are set to my approval. If they want to play with me, they have to play on my terms, not on theirs. NEVER try to set terms at the dealership.. DO IT AT HOME, at your computer, it's much easier to hang up a phone than to walk out.


Hope this helps.
B

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"When two people agree on everything, one of them is not necessary" - Arliss

A couple more points:

b-line said it, but i want to stress it - NEVER EVER put money down on a lease, ever, EVER. I"m not talking about tax, title, lease, i'm talking cap cost reduction i.e. down payment.

For example, if you are after a 36 month lease, and they as for a $3600 down payment, you've just increased your payment by $100/month, UP FRONT!.

Also, negotiate the purchase price first, but don't let on that you're leasing. ONce you've negotiated and then said ok, let's do the lease numbers on that purchase price, they'll probably say "oh, i can't do a lease on that number, tha'ts only for a retail purchase", it's at that point that you walk out.

Bank fees are complete bullshit, ALWAYS ask to have it waived, it's unlikely, but it can't hurt to ask.

You can roll the sales tax into the lease, which will cost you a bit more because you're now financing the tax, but if you pay the tax out of pocket up front, you don't get it back in certain states if the car is stolen or totaled. It's best to check the laws in your state before making this decision.

Now, here's the ass kicker.

If you lease, and then move to another state, say from NY to NJ, you will get whacked for sales tax on the total of the remaining payments that you owe on the lease. There is no way to get around it, just accept that you will have paid double sales tax. So if you plan on moving to a new state during the term of the lease, don't lease. (Some states like CA charge sales tax monthly, which is the right way to do it, NY and NJ and CT screw you).

Don't lease if you don't plan on taking care of the car. There will be an end of lease inspection and you have to give the car back with only normal wear and tear. If you have a "screw it, it's a lease" mentality and don't take care of the car, you're in for a rude awakening at the end of the lease when they whack you for fixing all of the dents, scratches, rips and tears and new tires.

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