Where do you want to go?

 

 

 

 

 

 

Negotiating a Car Lease

How and When to Negotiate Your Car Lease Deal

Some "experts" have suggested that you initially not inform a dealer how you plan to finance your car — that you should wait until a price has been established, then tell them that you want to lease.

Don't do it! It's old advice and it doesn't work well anymore.

Up front, let the dealer salesperson know that you want to lease, that you consider yourself informed about leasing, that you want to discuss selling price, not just monthly payments, and that you are not interested in playing games.

Let the dealer know that if you can get a good fair deal, you'll lease today. Otherwise, you're willing to walk out and find another car and another dealer.

The three key advantages you have and should use in any car lease negotiation are:

• Your time to prepare and educate yourself about the car, prices, and leasing
• Your ability to shop around and find the best deal
• Your ability to walk away

Prepare to Negotiate

If you've already done your homework, this process will be as smooth as silk. If you haven't, the process could be long and painful, not to mention expensive.

First, you should negotiate the lease price (cap cost), having a specific target price in mind (see Know What to Pay). The lower the price, the lower your monthly lease payment. Don't let them tell you that price isn't negotiable in a lease. It's an old trick. Unless you're wanting a top-selling car that's in short supply, price is always negotiable.

It is also useful to know what lease price other people are getting for the same car you want to lease. See our article What Should I Pay for My Car? for more details.

Since the dealer only controls price, don't expect to get very far trying to negotiate residuals and money factor, which are controlled by the leasing company, for which the dealer is just acting as an agent. You can, however, ask if they work with other leasing finance companies or banks who might offer better terms.

Next, you should ask about any rebates, advertised specials,  factory-to-dealer incentives, or discounts that would reduce your cap cost. Tell them what down payment, if any, you would like to make and negotiate a fair price for your trade-in (you should already know its wholesale value). Ask about any acquisition fees, disposition fees, or other charges that would affect your cost.

So You Got the Deal

Finally, ask the dealer to calculate your monthly payment amount, less sales tax, based on all the figures that have been agreed upon. While the salesperson is gone to check with the Finance and Insurance (F&I) Manager to calculate the numbers (salespeople don't make these kinds of  calculations), do your own calculations. When he returns, it's very important that you check their payment figure against your own.

Make sure you're using exactly the same cap cost, down payment (cap cost reduction), residual value, money factor, and term (lease months) as the dealer is using, and that you've included any extra costs that you are not paying up-front in cash. If there is a discrepancy, have them explain their calculations in detail, step-by-step. Often, the difference is a "mistake" or a previously unmentioned extra charge, a "hidden" fee, or you weren't given correct credit for your trade-in.

When No Negotiations Are Required

Now that you know the essentials of negotiating a lease deal, you should also know there are times when little or no negotiating is required.

When you find good lease deals being advertised in the newspaper, on TV, or on a car maker's web site (see Where Are the Deals), these are special packaged deals jointly sponsored by the dealer and the car manufacturer. These deals are nearly always good deals and usually require no further negotiating. In fact, even if you wanted to, negotiating is usually not possible due to the special conditions required to offer the deal. Typically, every element of the deal — lease price, term, money factor, residual, vehicle make and model — is already set and can't be changed.

Most of these manufacturer "subvented" deals are better than you could negotiate yourself. So, keep a sharp eye on those ads.

What's the catch with these special deals? The only catch is that the deals may only be available on certain specific models and styles. If you like the model/style, fine. If not, you'll have to go back to getting your good deal the old fashion way — negotiate for it.

Car Lease Negotiating Tips

Following are some important tips that may help you in your car lease negotiations:

  • Always negotiate price, never monthly payments (unless you know how monthly lease payments are calculated)

  • Always negotiate price UP from dealer's cost, not DOWN from the sticker price

  • Never let the dealer tell you that lease prices are not negotiable

  • Never tell the dealer what monthly payments you can afford – give him a price instead (unless you know how to calculate payments from price)

  • Always come prepared with the dealer invoice price for the vehicle you want

  • Always come knowing what your trade-in is worth

  • Never let the dealer tell you your source of invoice prices is wrong

  • Never, ever give the dealer a deposit on a car during negotiations

  • Never give the dealer a chance to "lose" the keys to your trade-in

  • Don't sign a "purchase/lease agreement" until you've settled on a deal

  • Never reveal your attraction to a vehicle ("I just love that car") during negotiations

  • If you're not comfortable with the salesperson, ask for another, or leave

  • Always give yourself the option of walking out if negotiations don't go your way

  • Let the dealer know up front that you are knowledgeable about leasing

  • If you sense the salesperson is playing games with you, ask them to stop

  • Don't agree to extended warranties, credit insurance, or worthless add-on services

  • Always check the dealer's monthly payment figures against your own figures

  • Generally, it's best to deal at the end of the day, at the end of the month, on a weekday, on a rainy day, or any slow period

  • Never negotiate when you are in a hurry or have limited time to deal

  • Never accept an offer to take a car home overnight before you've settled a deal

  • If you become tired, confused, intimidated, or pressured during negotiations, you're doomed

Summary

Negotiating a car lease is just as important as negotiating a purchase. The main factor you have to bargain on is price. Know your pricing information before you visit a dealer. If you can find advertised manufacturer-sponsored promotional lease deals, you don't need to negotiate — if you like the vehicle being promoted.

For more, see LeaseGuide.com