Contrary to what many people think, car dealers aren't the ones that actually lease out the vehicle. Leasing is just another method of financingso you'll actually be leasing through a bank or leasing company. This doesn't mean a dealer won't make money off a lease.

In fact, most dealers LOVE leasing because it allows them to make more profit than a traditional car purchase. One of the main reasons for this is due to the confusing nature of car leasing. Consumers are not used to leasing terminology and there's a lot of confusion. You hear terms like money factorscapitalized cost reductionresidualsacquisition feesand wonder what it all means. Leasing is pretty straightforward once you learn how it worksbut to the uninitiated it's a complex web that can cost you a lot of money.

In a lease, consumers tend to concentrate on the monthly payment instead of the price of the car. It's just as important to negotiate the price during the lease as it is when you're buying, but a lot of consumers don't realize this.

What ends up happening is the dealer will raise the purchase price of the car higher than they would if you were buying it. In lease terms, the purchase price is called the capitalized cost, and it affects your monthly payments considerably. While you're focusing on low monthly lease payments, you don't realize the price of the car was too high.

Some dealers even get away with selling the car at full MSRP, pocketing a profit of several thousand dollars.

How Much Do Car Salesmen Make? - Motor Trend

Another way dealers make money off leasing is to markup the interest rate which is called the money factor. Money factors are presented as fractions, such as. They seem low, but you need to convert them to an annual percentage rate in order to see if they're fair or not. To do so, you just multiply the money factor by 2, Dealers aren't necessarily looking out for your best interest when they're shopping for a lease deal. Chilean stock market hours usually have several leasing companies and banks they work with to offer leasing, and they look for deals which will give them the highest interest how do car salesmen make money on leases markups and in some cases, markups on the acquisition fees as well.

They also look for lease deals which allow them to finance the full MSRP of the vehicle or more.

Who Makes Money in Car Leasing? - by dicajytuh.web.fc2.com

That way, they can add high margin items such as pin striping or other useless add-ons that increase the price of the vehicle and thus the amount financed. Most consumers don't even realize that things have been added on, because it may only add a few dollars to the lease payment. By now you should realize your best defense against getting ripped off during a lease is to educate yourself.

A little knowledge goes a long slaves on the stock market in leasing.

My Recommendation for Car Shoppers TrueCar No-HaggleEdmunds Price Promise and Car Show are the quickest way to see the lowest car prices in your area. These sites show you no-haggle prices from dealers closest to you - and the deals are usually really how do car salesmen make money on leases.

Who Makes Money in Car Leasing? - by dicajytuh.web.fc2.com

This should be the first step you take when negotiating your car price. Follow this up with my checklist to make sure you squeeze out every last bit of savings. After being ripped off on his first car purchase, he devoted several years to figuring out the best ways to avoid scams and negotiate the best car deals.

He has written hundreds of articles on the subject of car buying and taught thousands of car shoppers how to get the best deals.

Error (Forbidden)

Got a Question About This Article? Car Leasing Terms Explained in Plain English Do's and Don'ts When it Comes to Auto Leasing The Most Common and Costly Mistake When Leasing a Car The 2 Different Types of Car Leases Where to Shop For Car Leases Sample Lease Contract with Explanations Leasing Strategies How to Quickly Figure Out if a Lease Deal is Good How to Lower Your Lease Payments How to Get the Most Competitive Lease Quotes The Best Cars to Lease if You Want a Great Deal How to Find out the Manufacturer's Lease Rates The Best Time of Year to Lease a Car Why It's Not Smart to Put a Down Payment on a Lease 5 Ways to Get Out of a Car Lease Early How a Single-Payment Car Lease Can Save You Money Should You Buy the Car at Lease End?

How to Profit From an End of Lease Buyout Should You Lease From the Same Company Again? Car Buying Guide Weekly Tips Real Deals. Get My Weekly Email Tips.

How Dealers Make Money on Leasing. Get My Free Weekly Advice on Car Buying. The Basics Research Negotiation Before You Buy. The Basics Do's and Don'ts Types of Dealers Dealer Scams. The Basics Saving Money Types of Coverage. The Basics Extended Warranties Other Add-Ons. Some links and services recommended on this website provide compensation to RealCarTips. All recommendations are based foremost upon a good faith belief that the product, service, or site will benefit car buyers.

Read the full Compensation Disclosure for more details.