Understanding the Pros and Cons of Leasing a Vehicle

Introduction

Navigating the world of car leasing can be complex, especially if you are not familiar with the financial nuances involved. One tool that simplifies this process is The 1.5% Guideline. This rule helps identify good lease deals by providing a clear benchmark for evaluating monthly lease payments in relation to the vehicle’s MSRP (Manufacturer’s Suggested Retail Price). In this blog, we’ll explore how to use The 1.5% Guideline effectively and how Leasify’s advanced tools can further streamline your leasing experience.

What is The 1.5% Guideline?

The 1.5% Guideline is a straightforward guideline used to determine whether a lease deal offers good value. According to this rule:

• Good Value Lease: Monthly payment equals 1.25% – 1.5% of the vehicle’s MSRP.
• Bad Value Lease: Monthly payment exceeds 1.5% of the vehicle’s MSRP.

For example, if you’re considering leasing a car with an MSRP of $40,000:

• 1.5% of $40,000 = $600

A monthly lease payment of $600 or less would be considered a good value. This rule ensures that you are not overpaying for the lease and helps you avoid bad deals where you might end up paying significantly more than the vehicle’s depreciation.

Importance of The 1.5% Guideline

Understanding and applying The 1.5% Guideline offers several benefits:

• Ensures Value for Money: By adhering to this rule, you can ensure that you are getting good value for your money.
• Simplifies Decision-Making: It provides a clear benchmark that simplifies the evaluation process.
• Avoids Overpayment: Helps you avoid bad lease deals where you pay more than necessary.

Factors Determining Lease Value

• Money Factor: Essentially the interest rate on the lease.
• Residual Value: The estimated value of the vehicle at the end of the lease term.
• Rebates and Incentives: Financial incentives offered by manufacturers or dealerships can reduce the overall cost.

How to Use The 1.5% Guideline with Leasify

Leasify’s platform is designed to make the application of The 1.5% Guideline as seamless as possible.

Step 1: Get Real Offers from Multiple Dealerships

Leasify enables you to receive real offers from multiple dealerships...

Step 2: Use Advanced Matching Algorithms

Leasify’s advanced matching algorithms align lease offers...

Step 3: Apply The 1.5% Guideline to Evaluate Offers

Use The 1.5% Guideline to evaluate the lease offers you receive...

Example Calculation

Let’s say you receive a lease offer for a car with an MSRP of $40,000:

• 1.25% of $40,000 = $500
• 1.5% of $40,000 = $600

If the monthly lease payment is between $500 and $600, the offer is considered good value.

Step 4: Conduct Equity Assessments

Before finalizing a lease, Leasify offers tools...

Step 5: Leverage Lease Counter Offer Calculator

Leasify provides a Lease Counter Offer Calculator...

Step 6: Verify Fees and Costs

Ensure that all fees and costs associated with the lease are transparent...

Additional Considerations

• Mileage Limits: Ensure the lease agreement includes...
• Wear and Tear Charges: Leased vehicles must be returned...
• Down Payments on Leases: Down payments can lower monthly lease payments...

Conclusion

The 1.5% Guideline is a valuable tool for identifying good lease deals...