Cut the cost of your car lease
Many leasing companies offer a little-known program that can significantly cut the cost of your car lease. It’s called the Multiple Security Deposit (MSD) lease, and here’s how it works.
Most leases require a security deposit — usually equal to one monthly payment rounded up to the nearest $50. This is returned to you at the end of your lease. Note, a security deposit is different from a down payment, which is rolled into the lease price of your car, and is never returned.
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In addition, every lease has something called the money factor or lease factor. It is essentially the interest rate you are charged for the lease. You’ll see it as a decimal — something like 0.0033. This money factor is used to calculate your monthly lease payments. The kicker is, your money factor automatically goes down by a certain percentage when you pay a security deposit.
If your leasing company offers an MSD program, you are allowed to pay more than one security deposit, reducing your money factor with each one. The bottom line is you pay less every month plus get all your security deposits back at the end of the lease. Just remember to do the math ahead of time to make sure your overall savings will be more than you could otherwise make by investing the total amount of your MSDs.
- FC&A Staff Writer