Lease Negotiating

Some experts have suggested that you initially not inform the dealer how you plan to finance your car — that you 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 salesperson know that you want to lease, that you consider yourself well informed about leasing, that you are knowledgeable about the car model you've selected, that you want to discuss selling price, not 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 dealer or leasing company who will give you the deal you want.

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

• Your time to prepare
• Your ability to shop around
• 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). 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.

Since the dealer only controls selling 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 companies who might offer better terms — or you can shop for another leasing company, bank, or credit union on your own. Or let one of the online services, such as Primelease, do the work for you, for free.

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 them 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 the same cap cost, residual, money factor, and term as the dealer is using. If there is a discrepancy, have them explain their calculations in detail, step-by-step. Often, the difference is a "mistake," some previously unmentioned extra charge, or you weren't given the 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 or on TV (see Where Are the Deals), these are packaged deals jointly sponsored by the dealer and the leasing company. These deals are usually already good deals and usually require no further negotiating. In fact, even if you wanted to, negotiating is often 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.

Usually these advertised deals are better than you could negotiate yourself. So, keep a sharp eye on those ads.

• Always negotiate price, never monthly payments (unless you know exactly how monthly 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
  
  
• 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 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 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