Are Chrysler dealers allowed to negotiate the money factor on a lease deal?

Question

Are Chrysler dealers allowed to negotiate the money factor on a lease deal? I want to negotiate a lease deal so I need to know how hard to push on the capitalized cost.

Answer 1

The "money factor" is essentially just the effective interest rate of the lease divided by 2400 (e.g. a 12% lease would have a money factor of 0.005). It is intended to estimate the amount of interest you pay each month (the higher the interest rate, the higher the money factor).

My guess for this convention (rather than posting the interest rate like a loan would) is so that it's not directly comparable to what interest rate you would pay for a loan instead. Very few people question will question it, they'll just look at the monthly payment and see if they can afford it. Whereas if they new it was essentially a 12% loan, they might question it.

However, to answer the actual question...

The rate is largely determined by your credit score and market interest rates for car loans, and may not be negotiable. Many dealers will actually sell the lease to be packaged into securitized bonds (analogous to "mortgage bonds" that consist of thousands of mortgages). So there may not be much room (if any) to negotiate the factor.

I would instead do the same thing you'd do if you were buying the car with a loan - negotiate the price , not the interest rate. That will still reduce how much you pay for the car overall and is more transparent to negotiate.