Quote:
Originally Posted by JAC23
So I'm about to sign for a lease but im not 100% sure if i should put money down or not. The msrp price at the dealership is $79K and i was able to get it down to 75K. My sales woman said the current interest rate is so low that it does not make sense to put money into MSD's (is that possible?).
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Well she's wrong. Putting money down purely for MSD will reduce your effective interest rate significantly. Assuming you have a money factor of .00129, the max of 7 MSD takes your money factor to .0008, which takes you from an APR of 3.096% to 1.92%, a more than 1% reduction.
You have to consider your alternatives for what you'd do with that money otherwise over the next 3 years. Right now the risk-free rate on 3 year treasuries is less than 1%, and you'd have a little bit of duration risk if you invested that money otherwise. Can you,
risk free, make more than 1% right now? Probably not. Max MSD makes sense.
This is all according to the awesome Leasematic app, and the math works out.