3. What is the money factor?
A "money factor" is lease jargon for what most people think of as an interest rate. Money factors usually look something like this: 0.00125. Just as with a traditional interest rate, the lower the number the better.
To convert the money factor back into an interest rate, multiply it by 2,400. So if the money factor is 0.00125, multiply it by 2,400, and you'll see that it's 3 percent.
Be sure to ask what the money factor is that's being applied to your lease and convert it to an interest rate. It's an easy way to make sure you're getting a rate appropriate for your credit score.
4. How many miles does the lease include?
Sometimes you'll hear about a great lease deal but then will learn (by asking or by reading the fine print) that the lease only includes 7,500 or 10,000 miles a year. Limited miles might be fine for someone who rarely drives, but most people will need a minimum of 12,000 miles a year. Some drivers will require more.
Before signing on the dotted line, make sure the lease you're considering will allow for enough miles. These lower-mileage leases can be tweaked to allow for more miles, but they will increase the monthly payment.
5. How much money is due up front?
Always ask this question if you see a newspaper or TV ad offering a low monthly lease payment. More often than not, that low monthly payment comes with a not-so-low upfront cost.
You also want to ask the dealer this question if you are offered a "killer" lease deal.
Drive-off fees — which are your upfront out-of-pocket costs — are a combination of fees and a down payment. The effect of a bigger down payment is lower monthly payments, just like a traditional loan.
Ideally, though, you want to pay as little as possible up front. Unlike a traditional loan, initiating a lease with a big chunk of cash may not save you much money in the long run.
In fact, putting down a hefty chunk out of pocket to start a lease can actually hurt you. Should your leased vehicle be totaled or stolen, there is no guarantee that the down payment you've made will be returned to your insurance settlement.
Car leasing pros often choose just to pay the first month's payment and registration fees to start the lease. The other charges are rolled into the monthly payment. Because the money saved in upfront out-of-pocket costs is spread out over the length of the lease, the monthly payment increases. However, the overall total cost of the lease remains mostly unchanged.