As of summer 2024, electric vehicles (EVs) are offering some very appealing lease deals. This is primarily due to a combination of government incentives and manufacturers reducing the money factor on leases to the equivalent of a 1% APR. These two factors can make leasing an EV highly attractive today. Additionally, if the lessee can charge at home, they can benefit from significant fuel savings. However, it's important to note that insurance rates for EVs are typically a bit higher due to their higher repair costs. For additional information on the costs of owning an EV this short video might be helpful.

For more detailed and up-to-date information on the best lease deals, feel free to contact us at CarOracle. We'll help you find the best leasing options tailored to your needs.

We get this question a fair amount, and it is understandable. First, let's establish that the market is fluid, and at any given time, there can be incentives that adjust the overall lease expense for a client. However, there are two large drivers in the cost of leasing a vehicle: the resale value of the vehicle and the money factor.

Since the resale value is an essential driver in the cost of the lease, brands with higher used car values, such as Honda, Lexus, Subaru, and Toyota, will benefit. The recent ALG Residual Value Awards list specific vehicles that fall into this category. But let's peel this back to understand why. Assume we have two vehicles from different car brands, and both have an MSRP of $45,000. Now, in three years and 36,000 miles, based on historical transaction data, one car is expected to be worth $25,000, and the other is expected to be worth $30,000. The leasing company will account for this, and the lease payments will be at least $138 more per month for the vehicle worth $5,000 less at the end of 36 months.

Therefore, car manufacturers that have vehicles that retain a higher percentage of their original MSRP in the used car market, have an advantage in creating a more compelling lease payment. However, the other key variable is the money factor, and oftentimes, manufacturers that have a desire to increase vehicle sales through leasing will lower the money factor to make the lease more competitive.

The money factor is the cost of borrowing the money to lease the vehicle that is presented in decimally formatted number. If you multiple the money factor by 2,400 the output will be the equivalent APR. Therefore a money factor of .00332 would correlate to an APR of 7.9%. There are times when manufacturers will subsidize the money factor, to bring down the cost of the lease to the consumer. This is an incentive, because rather than offering a rebate or another form of incentive, they will charge below market rates for borrowing the lease funds.

In conclusion vehicles with a higher residual have an advantage in creating competitive lease offers. However, a materially lower money factor, can be leveraged to reduce the cost of the lease as well.

Service Fees:

For New Car Consultations, we charge a flat rate of $99. This fee covers the research and personalized assistance we provide to help you find your ideal new car, including obtaining competitive quotes. 

Dealer Compensation:

In addition to client fees, CarOracle receives compensation from the selling dealer. This arrangement allows us to maintain our high standards of service while keeping our costs affordable for our clients.

Our Commitment to Integrity:

We adhere strictly to California Vehicle Code 11735, which outlines our obligations as licensed auto brokers. This code ensures that we operate with the utmost integrity and transparency, always acting in our clients' best interests.

At CarOracle, we strive to provide an unparalleled auto-leasing experience that prioritizes your needs above all else. Our compensation model reflects this commitment, ensuring you receive high-quality, personalized service that enhances your satisfaction with your new car purchase. We value your trust and confidence in us, and we're committed to providing the most effective and efficient auto-buying experience that saves you both time and money.

CarOracle is dedicated to sourcing exceptional lease car deals for clients across California, with a focus on Los Angeles, Orange County, San Diego County, and Riverside. We avail ourselves of the entire marketplace to source the best pricing, coupled with dealerships that have demonstrated a commitment to the level of customer experience our clients want and we expect.  So in short, our aim is to source the best lease deal for you, regardless of whether you live in Los Angeles, Irvine, San Diego or Temecula etc. 

Answer: CarOracle’s approach to structuring car leases combines our industry expertise with industry specific systems to ensure each lease is optimized for our clients:

1. Money Factor Evaluation and Insights: Our access to specialized systems allows us to confirm the base rate money factor offered to dealers. We ensure you benefit from the most competitive rates, akin to interest rates, which affects overall lease financing charges.

2. Multiple Security Deposits (MSDs) Analysis: We can evaluate the benefits of MSDs to reduce the money factor, leading to material savings over the lease term.

3. Capital Cost Reduction Analysis: We asses the impact of cap reductions, balancing immediate lower monthly payments against other solutions such as Multiple Security Deposits.

4. Incentives and Rebates Application: We utilize various sources to stay aware of current leasing incentives, to ensure the right offers are applied to your situation.

5. Residual Value Confirmation: Using an industry specific leasing application, we analyze the vehicle's residual value to ensure your payments are fair and the lease cost is justified.

6. Lease Calculation Verification: We employ our own systems to calculate and confirm lease programs, ensuring accuracy in every aspect of your lease.

7. Customized Lease Terms: Tailoring lease terms, including duration, mileage, and budget, is key to our personalized service approach.

8. End-of-Lease Guidance: We advise on options at lease end, such as buying the vehicle, returning it, or transitioning to a new lease.

9. GAP Insurance and Additional Products: We recommend products like GAP insurance for protection against financial shortfalls.

10. Negotiating Favorable Terms: We negotiate terms favorable to you, including beneficial additional services and protections.

We know most of these areas may seem confusing, and like most things are some nuances where experience can be beneficial, which is why we enjoy leveraging our expertise for the benefit of our clients.

Answer: Car depreciation is the decrease in a vehicle's value over time and it significantly affects both leasing and buying. In leasing, you pay for the car's depreciation during the lease term. This is calculated as the difference between the car’s initial value and its projected residual value at lease end. A higher residual value, indicating less depreciation, usually results in lower lease payments.

For purchases, depreciation impacts the long-term value of your vehicle. A car that depreciates rapidly loses its resale or trade-in value faster, affecting your return on investment when you sell or trade it.

Lease subvention, used by manufacturers to enhance leasing deals, can include inflated residual values or lower interest rates, leading to more attractive lease terms. However, it's important to consider the full terms of the lease, including end-of-lease costs.

Considering depreciation is key in both scenarios to ensure a financially savvy decision, whether you're leasing or buying.

Answer: The "money factor" is a term used in car leasing to represent the interest rate on a lease. Unlike a traditional Annual Percentage Rate (APR) used in car loans, the money factor is expressed as a smaller decimal number.

To understand the money factor, it's important to know how it's calculated and how it relates to the cost of your lease. Essentially, the money factor determines the finance charges you will pay over the course of your lease. A lower money factor means lower finance charges and, consequently, a lower overall lease cost.

To compare the money factor to an APR, which is a more familiar term for many, you simply multiply the money factor by 2,400. For example, if the money factor is 0.0025, the equivalent APR would be 0.0025 x 2,400 = 6%. This conversion helps you understand the true cost of financing your lease in more conventional loan terms.

Understanding the money factor is key in evaluating the financial aspect of a car lease and can help you make a more informed decision when considering different lease options. Remember, a lower money factor usually translates to a more favorable lease agreement.

Answer: Leasing a vehicle with the intention to buy it at the end of the lease can be a savvy financial strategy under the right circumstances. Here's why:

1. Lower Monthly Payments: Leasing can offer lower monthly payments compared to loan payments since you're covering the vehicle's depreciation and finance charges over the lease term.

2. Favorable Interest Rates: Sometimes, the interest rate or "money factor" in a lease can be lower than that of a traditional car loan, although this depends on your credit score and market conditions.

3. Optionality at Lease End: Leasing gives you the option to buy the car at a predetermined residual value at lease end. If the car’s market value is higher than this residual value, you benefit; if not, you can choose to return the car.

4. Alignment with Car's Value: If the leasing company’s residual value estimate aligns with your own estimate of the car's worth at the end of the lease, it can make financial sense to lease.

5. Buying a Known Used Car: Opting to buy the car at the end of the lease means purchasing a used vehicle whose history you fully know, unlike buying from external sources.

However, there are downsides, such as potentially paying sales tax on the finance charge included in your lease payment. Therefore, it's important to weigh all factors, including total costs and how well the lease fits your lifestyle and driving habits. For a more detailed exploration of this topic, read our full article.

Answer: GAP insurance, or Guaranteed Asset Protection insurance, is a specialized form of auto insurance designed to protect you financially in cases where your car’s actual cash value (ACV) is less than the amount you owe on it. This scenario is common when a car depreciates more quickly than the loan balance decreases, creating a 'gap' between the vehicle's value and the remaining loan amount.

GAP insurance becomes particularly important if you find yourself in a situation where your vehicle is totaled or stolen. Standard auto insurance policies typically cover only the current market value of your car, not the entire amount you owe. If there's a significant difference between these two figures, without GAP insurance, you might end up paying a considerable sum out of pocket.

This insurance is a wise consideration under certain circumstances, such as:

• Making a minimal down payment or having a long-term finance agreement.

• Leasing a vehicle, which can often involve steep depreciation.

• Choosing a car model known for rapid value depreciation.

In summary, GAP insurance is about safeguarding against potential financial risks associated with car loans and depreciation. Deciding to purchase it should be based on an assessment of your specific financial situation, your vehicle’s depreciation rate, and the terms of your loan or lease agreement.