How to Get the Best Car Lease

What are the steps required to find and get the best possible car lease deal?

Before we launch into the steps for getting a great car lease, you should know how leasing works. That's what this web site is about. So, if you haven't done so already, we suggest you read our Lease Guide first, then come back to this page.

There are essentially three different methods for getting good car lease deals — Good, Better, and Best. The technique you use will depend on which is more appropriate to your particular situation. Let's explain now.

GOOD

This technique requires the most work and knowledge. It's a kind of do-it-yourself lease deal.

To be successful you must know which car brands make the best lease cars, you must know how to research and negotiate prices, and you must know how to evaluate lease deals.

First, you should know that American car brands do not generally make good lease vehicles because lease-end resale (residual) values are generally lower than Asian and European brands. High residual values make for lower lease payments. You should also know that many American brands no longer have manufacturer-sponsored leasing programs (Ford excepted). Those American-brand dealers who lease use large national banks whose lease deals are typically not very good.

Therefore, to get the best lease deals, choose a vehicle that has a high natural lease-end residual value. As a rule-of-thumb, if the 36 month lease-end residual percentage is 50% or higher, then it can be a good lease deal, assuming other factors are favorable as well.

After residual value, a vehicle's price is the next most important factor in getting a good lease. Therefore, you should find vehicles that already have advertised discounts and rebates — and then negotiate additional discounts if possible. Use Edmunds.com to research prices, including dealer invoice price, True Market Value price, and available incentives.

Finally, money factor is important. Money factor is a form of financial interest rate and is stated as something like .0022. To convert to standard interest rate, multiply the number by 2400 (yes, it's always 2400). Therefore, a money factor of .0022 is equivalent to 5.28% interest. A good money factor is anything lower than the current national new-car loan rate, which at the time of this writing is 6.71% (source: Bankrate.com).

If you have a good price, a nice high residual, and a low money factor, you automatically have a good lease deal. If you want to know exactly how good, you can use the Lease Evaluator in our optional Lease Kit.

BETTER

Many car companies offer time-limited special lease deals that are already genuinely good deals without any effort on your part. These are usually advertised on the car company's web sites and describe the details of the deals. Look for the "promotions" or "incentives" section of the site.

These special lease deals are put together by car manufacturers, not dealers, to help promote sales and make their vehicles more affordable. The deals contain built-in price discounts, rebates, low money factors, and high residuals. Again, you'll find most of these deals on Asian and European brands rather than American brands.

What's the catch?

If there's a catch, it's that the deals are usually only good during a specified short time period, such as a single month, and that the deals only apply to certain models and styles of a brand. If you like the model, fine, but if not, you're back to negotiating your own deal as described in the "GOOD" technique section above. Furthermore, the deals often require a hefty down payment, which can usually be negotiated downward if you are willing to accept the higher monthly payment that comes with it.

BEST

Some of the best possible lease deals are on lease take-overs. That is, you take over, or "assume" a car lease from someone who wants out of their lease.

Why is this a better way to lease?

First, the person giving up their lease is often desperate and can no longer afford payments. They offer concessions such as cash and/or payments as an incentive to anyone wanting the lease.

Second, you avoid the fees, taxes, and down payment associated with a brand new lease. You get an almost new car by simply taking over payments. If the original lessee made a large down payment to reduce his monthly payment, you get that benefit. If the original lessee got a great deal on his lease, you get that benefit.

There are online companies, such as Swapalease.com, that act as a matchmaker between people who want out of their leases and people who want to take over a lease. All the fees are paid by the "seller," not the person taking over a lease.

How do you know if this is right for me?

Read the details of the take-over offer. If the remaining mileage on the lease sufficient for your driving needs? If not, remember that you would have to pay a per-mile excess mileage fee at lease end. Compare the monthly payment on the take-over lease to a new lease on a brand new model of the same car (use our Lease Calculator or compare to advertised new-car lease deals). Is the take-over payment is lower than you would pay for a brand new lease of the same car? If so, it's a good deal.

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