Hello,
If I am not planning on purchasing the car at the end of the lease, is RV/MF important? I know MF is used to determine the rate, but if I can get a 19 Kia Niro LX for $199 all inclusive and $2000 DAS, does it even matter what the RV is? I am 100% sure I am not going to purchase this car at the end of lease.
Yes you should read leasing 101
This is exactly why the site exists
You’re shopping by monthly payment and that’s a no no
There are variables that impact the monthly payment
Such as sale price, RV, and MF
The goal is to close the gap between sale price and RV with the lowest MF
So if you have a super low RV, the gap you’re closing between sale price and RV is greater, resulting in a higher lease cost
How do you know that $199/$2000 is a good deal without knowing what gets you to those numbers?
Would you take out a loan on any other 5 digit asset without knowing the interest rate?
There’s times when the MF isn’t that big of a deal like when you’re basically taking the car at residual value. At that point your whole payment is interest, inception fees capitalized and tax.
Both are very important but I will argue that the RV is more important. I have a buddy at an Audi dealer price out a FWD A3 ($35k MSRP) for a friend with a ridiculous discount but the RV was 40% so it was still more expensive than a loaner 330i xDrive with a RV 20% higher. The money factor was a lot lower on the A3, a terrible RV was a killer.
You need to focus on the overall structure of the lease and read the leasing 101 section on this forum.
The closer your sales price approaches the RV, the more the MF drives the monthly.
Tacoma deals are a big example here.
Good discounts, High RV but also High MF.
I just ran a deal on a Taco for someone. He’s paying something like 100 in depreciation, and the rest is interest and tax. Still a great deal for a 50k truck for 2 years.
See what I mean? Haha.
I still can’t get over the fact a Tacoma can go for 50K. 
Isn’t MF still important in your example since you are paying interest on the RV of the car too as part of the rent charge? Even if you had $0 depreciation, it could still be $100-$200+ month in rent just for the vehicle itself if the MF is high.
Granted this would likely only matter with a much more expensive car, not a base model Kia.
It is, but it’s not as big of a factor as depreciation. In the end, Interest on automotive loan products is capped in most if not all states so if there’s no depreciation to pay due to a low sale price/high RV relatively theres still a ceiling on what a payment will look like.
Pretty sure OP has left the chat
I think the subject was brought up before ala If they meet my expectations why should I care how they arrived there?
Some people don’t really care to know how the sausage is made as long as it’s tasty and leaves them fat and happy.
Was off reading the Leasing 101. I still dont really understand it (I understand how to calculate the RV and MF) but what I dont understand is if I dont plan on keeping the lease why it still matters.
Lets say I do a Kia Niro for $200 a month for 36 months and $2000 down. Right now thats around the cheapest ive seen for a Niro LX. Thats $7400 that I pay then I return the car and only pay for damages. Is my assumption off? I do understand that if I were to purchase the car, I would lose a ton of equity, but if I am returning it, I dont understand why it matters.
When you lease, you pay the depreciation of the car. The difference between the Selling price (msrp?) and RV is the projected depreciation. So if you are trying to lease a car with low RV, your payment will likely be higher than one with a higher RV.
Knowing the MF also allows you to see where you can lower the payment if the dealer has it marked up. Sometimes you might take a higher MF in exchange for more of a discount.
This is over simplified but should make the point.
If the MSRP is $30k or more and your payment is $200/mo with $2k up front then, no I don’t the believe the money factor and residual matters as long as you like the car. A good deal is a good deal, You don’t have to make sure it matches inside of some sort of spreadsheet however, the deal has to at least to be good by eye so to speak. What I mean by that is, based on what the MSRP of the vehicle you are buying is, for example $40,990–and someone told you $300/mo with $1,500 up front then, I personally wouldn’t bother with the particulars because a great deal is a great deal regardless of what the numbers are to work it out.
I’m speaking for me here. I know the vast majority here would still want to know selling price/rate/residual even if a $79k Macan S was offered at $559/mo with $2,500 oop but, I wouldn’t… I‘d say sign me up!
Thats what I am confused about. This is a $25000 MSRP car that im getting for essentially $140 + 60 tax and $2000 DAS. I wanted to know if RV/MF affected anything at the end of the lease but it doesnt seem to.
If you have NO intention of buying a vehicle at the end then, the residual doesn’t matter.
$60/mo in tax… are you sure?
Sorry, its $30 in tax in my area. So $170+30
How do you know that’s a good deal? RV and mf vary by region, as do incentives, so you may be comparing against the monthly someone else got in another area without taking into account the mf and RV for your area. What seems like a good deal without figuring out how they got to those numbers may be a great deal in one place and a horrible deal in another.