If you’re in the market for a new car and leasing is on the table, listen to it. Apparently, there is a way to lower your overall monthly payment by several thousand dollars. How? ‘Or’ What? Thanks to multiple security deposits, which is offered by some manufacturers.
This was highlighted by a financial advisor named Humphrey Yang on TIC Tac. The advice actually came from Cartelligent, which explains in detail several security deposits. One of the examples mentioned here is the rental of a BMW 3 Series.
Multiple security deposits lower the monetary factor or the interest rate by a fixed amount. Usually this is the same as the monthly payment amount rounded to the nearest $ 50. For this example, the BMW 328i, which has an MSRP of $ 43,845, the security deposit costs $ 500. Paying three security deposits ($ 1,500) at the start of the lease can reduce the monthly payment from $ 500 to $ 485, saving you $ 525 with a three-year lease.
Paying more security deposits can save you more money as it further reduces the monetary factor. With the example above, paying seven ($ 3,500) reduces the monthly payment to $ 465. This will save you $ 1,225 – a 10.5% return on your $ 3,500 investment.
Please note that security deposits differ from moving costs or down payment. Security deposits are refundable, which you will get at the end of your rental period. The amount you save increases as the SRP also increases.
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MSRP $ 41 245
MSRP $ 41 245
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Auto leasing is a popular choice for obtaining a vehicle in the United States, mainly because you don’t need a huge amount to pay up front, rather than paying in cash. Leasing also doesn’t require you to pay a lot per month, unlike financing your car.
But it has its drawbacks – you hardly own the car; you just rent it out during the period.