Leasing Auto Usate
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Who sets the residual values and interest rates on new cars
By Ralph Hoffmann
Before a customer can lease an auto through a dealer, several parties are involved to determine the residual value and the interest rate of the proposed auto lease. And understanding how residual values and rates are determined will help in negotiating a lower price.
First, a bank, credit union, pension plan or automobile manufacturer's leasing or lending subsidiary (commonly called a Money source") agrees to provide funds to pay the dealer the selling price of the auto. The Money source must then find someone to determine residual values for every auto it proposes to buy from a manufacturer.
Determining the auto residual value. The largest manufacturers may...
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