Finding Good Car Lease Deals

What Makes a Good Lease Deal?

How do you know a good deal when you see one? Where do you find the best deals?

Being able to recognize a good deal — or a bad deal — is an important part of successful automobile leasing.

Negotiating or finding a low lease price (cap cost) is the most important part of a good car lease deal.

But so is getting a high residual.

And a low money factor or lease rate. (see Car Lease Rates Explained)

And a low acquisition fee or bank fee.

It's the combination of all of these elements that makes a lease deal.

It's possible, for example, to have a nice high residual and a not-so-good lease price, and still have a good deal overall. Or a low money factor might compensate for a low residual to make a good deal. All these factors, in combination, must be taken into consideration when evaluating lease deals.

To the uninformed automotive consumer, a lease is nearly always seen as a good deal simply because the monthly payments are lower than loan payments for the same car.

This is how dealers want it, and it's why they emphasize monthly payments, not prices.

Consumers who get caught in a dealer's lease payment game will nearly always pay too much.

You can't simply look at monthly payments to evaluate a car lease deal. You could easily pay more than sticker price and still have what you believe are attractive monthly payments. This is the reason many people who are leasing today are overpaying, and the reason dealers love to lease.

Dealers count on a high percentage of their leases being based on full MSRP, or more — to uninformed customers who don't know any better.

So how do you know what is a good lease deal, and what isn't?

Those leasing ads in the newspaper — are they great deals or not? The offer your dealer just made to you — is it a fair deal or rip-off? How about that car-lease TV commercial you saw last night?

See our article, Understanding Car Lease Ads, for some answers.

Lease Deal Analysis

If you're not sure what a good deal is, how will you know when you see one? How will you recognize a bad deal? How will you know what deal to ask for when you're negotiating with your dealer?

It's extremely important to be able to quickly determine whether a lease deal is worth considering, based on the complex interaction of cap cost, cap cost reductions, term, residuals, and money factor.

For example, it is not sufficient to know that you are getting a great interest rate (money factor) — because your lease-end residual value may have been adjusted lower to compensate.

You can do the calculations and comparisons yourself, if you know how, or you can use the exclusive Lease Deal Evaluator calculator — a part of the optional Lease Kit — that enables you to easily size up any lease deal for any vehicle make and model. It's a great tool that helps you equalize the odds in the game of leasing.

It's one thing to know what a good deal is, it's another to actually find one. Where are the good deals to be found?

Where to find good lease deals

There are essentially three ways to find good car lease deals:

• Newspaper, radio, and TV ads are a prime source for locating car lease deals, as are auto dealer's websites. Car manufacturers frequently offer special limited-time subsidized, or subvented, lease deals on some of their models. They do this by discounting price and either boosting residuals or lowering interest rates (money factor), or both. The combination of all these elements makes for some great deals.
  
  If you notice in newspaper ads that all your local dealers for a particular manufacturer are offering the same or similar deals, it's likely to be one of that manufacturer's subvented deals, and probably worth your serious consideration. Most manufacturer-sponsored lease deals are nearly always genuinely good deals. Just make sure you can live with any restrictions that may be specified in the small print of these ads. You may also have to have an excellent credit score (700+) to actually get the deal as advertised. Check your credit score at MyFICO.com .

• Get discounted prices from one or more of the popular auto referral or pricing services now available on the web. We recommend InvoiceDealers, Edmunds, and CarsDirect You simply tell them what vehicle you want, they contact dealers in your area who have agreed to provide the best prices, and the dealers contact you to present their offers. It's best to ask for quotes from multiple companies at the same time so that you'll have plenty of information to compare.
  
  CarsDirect is a little different in that they do most of the work for you. If you like their deal, you simply go to the dealer, sign your lease papers, and drive away. No haggling, no stress and strain.
  
  This technique can get you the best lease deals when fully subvented deals are not available from the manufacturer for the vehicle you want. A highly discounted price combined with only an average money factor and residual is still a good deal.

• Check out non-dealer sources of lease financing. Most people think you have to go with the "captive" finance company used by a dealer. Not true. In fact, you can often find much better deals at independent car lease companies. Be aware that independent lease companies often can't compete with car manufacturers' promotional lease deals, but do well with higher-priced luxury cars. See Car Lease Rates for more detail.

Using these methods will get you good lease deals but it doesn't necessarily guarantee that you'll get the best deal possible. A little negotiating and haggling may still be required if you want a better deal. Read the next topic, Negotiating Deals, for some suggested negotiating tactics.