Leasing can be a confusing process if you’re new to it. As compared to buying a car, leasing happens to have a different language. If you know well enough about the car, you’re leasing, its process, and what is & isn’t negotiable will surely get you a great deal on leasing a car.

People are very much inclined to car leasing as the monthly payments are less than buying a new car. Moreover, the down payment is also very minimal, and the car is brand new, covered by a manufacturer’s warranty. While leasing a new car, you’re paying for the depreciation that occurs during the term of the lease including some interest & fees.

With a reasonable amount, you get a car having the latest technology, comfort features, safety, and a full warranty. When dealing with the car lease, you must have enough info about its nook and crannies as it’ll go a long way in saving you time as well as money while Turing up things in your favor. Here’re a few terminologies of car leasing that you need to understand as these will help you negotiate and get the best new vehicle lease. So let’s dive in;

Understand the Leasing Language

It’s easy for dealership’s finance officer to get you into a bad deal if you don’t understand what he/she’s talking about. Here’s a key to the terms you’ll come across;

Capitalized Cost: It’s the actual price of the vehicle. Keep in mind! It’s not the price shown on the window sticker. The cap cost can help you negotiate and get discounts.

Cap Cost Reduction: Anything apart from negotiation reducing the capitalized cost is known as the cap cost reduction. It might also include the value of the trade-in. Maximizing the cap cost reduction will inevitably lower the amount you’ll pay.

Money Factor: It’s the interest rate on the amount being used to finance the lease. Don’t compare it with the car loan interest rates but you can use it while comparing different lease offers.

Residual Value: It’s the estimate of what a specific car will be worth when the lease ends. Due to which, it’ll reflect the expected depreciation and this amount can be determined before the lease is signed. Be mindful, what you pay for a lease will be determined by subtracting the residual value from the capitalized cost, then the fees and interest will be added.

Buyout Price: In case you buy the car at the end of the lease, it’s the purchase price. It might or perhaps might not be the same as the residual value. If the residual value is way off when the lease ends, the dealer might make or lose money while selling the car on the open market.

Disposition Fee: This is the amount you’ll pay when the lease ends. It’s meant to finance the vehicle’s refurbishment as well as the preparation costs as it’s sent to the used car market. You’ll be liable for any excess mileage or perhaps wear costs at lease end. So ask about it in detail when availing the Bahrain cars leasing services.

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