One thing that turns people off is the fact that numbers from one dealer can be expressed in a different form than another; it's like comparing apples to oranges. There's no telling if what you're getting is a good deal. For that reason, we decided to put together this article - to help you evaluate a lease.

Residual Value - What is it?

It's important because it directly affects your monthly payments (the higher the value at the end of the lease, the less of a payment you're going to carry).

In general, how much you are going to pay per month to lease that BMW depends on the following three points:

• Principal and the interest on depreciation
• Interest on the residual value
• Sales tax
  

I know that the above is a bit dry so to make it easier to understand here's an example. Say, you lease a $30,000 car. The residual value at the end of the lease period is $15,000. What that means is that you will be paying the difference between the sales price (cap cost) and residual value. In this case, it's $15,000 plus interest over three years.

Divide that amount by 36 months to figure out your monthly payments (the base cost of the lease). In this case, the base payments before interest, taxes and other fees will be $416 a month. If you choose a car with higher residual value at the end of the lease, your monthly payments will be lower. So, it makes sense to look for cars with high residual value.

Understanding The "Money Factor"

The next most often used phrase after residual value is money factor. Think of it as a APR. The money factor is usually expressed as some weird decimal like 0.002. To convert it into APR percentage all you have to do is multiply it by 2,400. For example, if a dealer is offering a 0.004 money factor, multiply that number by 2,400 to get the actual APR - in this case, 9.6%.

When the money factor is represented by a whole number like 2.0 all you have to do is to multiply it by 2,4.

One thing worth mentioning is that the money factor is set by the financial institution, not the dealer which means there's little you could do about it. But you can keep that number in mind while shopping for a better deal somewhere else.

Don't Sign on the Dotted Line Before You Read the Fine Print

Take a close look at all fees and taxes when assessing a lease deal (read the fine print you will notice things like security deposit, disposition fees, and acquisition fees).

What's worth nothing is that those fees are not the same from manufacturer to manufacturer and that's why shopping around is so important. Often times you can have the security deposit waived if you just ask.

When evaluating BMW lease offers, add all those fees - that's the only way to compare apples to apples. Sometimes a lease deal that looks great may turn out to be a sour lemon after doing the math.

One thing to remember is to not be afraid to ask questions about all the fees you see on the lease. After all, you'll be the one paying them.

>> Check Out Our Current BMW Lease Offers or if You Have Further Questions about Leasing a Car from us, Call (570) 338-6955 to Speak with One of Our Experienced Lease Specialists <<

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