I was hoping for some guidance on these questions:
-Does the money factor on a car change or once its set originally it never changes?
-What is the reason a 2022 Etron has double the money factor of a 2022 Etron GT?
Thanks.
Typically, leasing programs are monthly and sometimes quarterly, so the money factor and residuals can change monthly. Typically, it is not huge swings month to month.
The money factor can differ from trim level to trim level because the bank sets a base rate, say .002. If the brand wants to incentivize leasing of a particular model, they can adjust that accordingly. So if X car is selling slowly, they lower the money factor to .0015. It is another way to incentives sales or leasing beyond a “rebate”.
Other brands will have the same money factor across the brand and then adjust residuals up/down to account for risk and rebates if there is an extra need to increase volume.
Either way, the bank uses a combination of rebate, residual, and money factor to assign long-term risk while incentivizing new vehicle leasing. AFS likes to do this song and dance where residuals and money factors vary from car to car.
Once the ink dries, your money factor doesn’t change within your contract.
Prior to that, unless you’ve got a valid rate lock money factors are subject to change monthly.
It’s a price just like any other price. Different models are going to have different internal targets for profitability X volume