While many would tell you leasing a vehicle is a bad idea that doesn’t literally mean it may never make sense for you. Perhaps you like the idea of not having to worry about increasing repair costs. Maybe you want to avoid the hassle of selling a used vehicle down the road. Or perhaps you just like to drive a ritzy new car every few years. Whatever you may think of this notion, at the end of the day you won’t mind to live the lifestyle you want when you can wisely manage your hard earned money. Even if you are eager to cut back in other areas to allocate budget for a car lease that’s your prerogative.
Having said that, there are many who have gotten themselves into grave financial trouble by negotiating a car lease. Owing to the fact that they failed to do their research first. Leasing a car isn’t as simple as buying a car. Lease terms vary and they are often set by car manufacturers, right down to the particular equipment packages of the car. Furthermore, the way lease deals are advertised, even seasoned lessees fail to negotiate a good deal for a car lease.
In fact, many might not even know that some lease terms are negotiable. And, of course, car dealers want to keep it that way. Keeping this in mind, here QuitALease has jotted down 14 smart tips to help you crack a good car lease deal.
1. Terms You Need to Know
When you are planning on getting a vehicle on lease, make sure to know the lease terminologies. They are different from sales terminologies and greatly help you understand how to score a good deal. Here is a quick look at the common lease terminologies:
- Money Factor: Lease’s interest rate.
- Cap Cost: The cap or capitalized cost is used for the vehicle’s price. It’s the price you have to pay if you are buying it outright.
- Cap Cost Reduction: It’s anything that reduces the capitalized or cap cost such as a rebate deal offered by the car manufacturer or trade-in.
- Buy-Out Price: It’s the price lessees pay if they decide to keep the vehicle at the end of the lease term.
- Residual Value: It’s the worth of the car at the end of the lease term. The value is based on the percentage of the automobile’s projected depreciation (decided before the lease begins), and may not reflect the actual market value of the car two or three years down the road. It might be different from the buy-out price.
- Acquisition Fee: The fee is charged at the beginning of the lease to cover the cost of arranging the lease.
- Disposition Fee: It is charged at the end of the lease term to cover the expense of prepping the returned vehicle to go on the used lot.
- Purchase Option Fee: It is probably charged when the lessee decides to buy the car at the end of the term instead of turning it in.
2. Know How Much You Can Spend
A car lease has more components than just the price of the vehicle. Sit down ahead of time and determine how much you can or willing to spend on the following:
- The down payment.
- The total cost or the cap cost of the car.
- The mileage limit .i.e. how many miles your lease agreement allows you to drive during a month before the lease charges you for excess mileage.
- The purchase-option or buyout price is charged at the end of the lease term when you choose to buy the car.
If you are planning to trade-in your vehicle, visit a vehicle valuation and automotive research firm’s website and find out the actual worth of your car, so the dealer won’t short-change you.
3. Find Out What Exactly You Want
When you show up at a dealership without having any particular car in mind it’s like showing up with a sign around your neck that reads “sell me the priciest option.” So do your research beforehand and figure out what makes and models best serves your needs.
Also, give some serious thought to the features or options you can’t live without and those you can. When you know your stuff, the dealer won’t be able to push you into a car more than you need. Most of all, it will set a solid first impression on the dealership when you are on top of things and can’t be easily persuaded.
4. Get Quotes in Advance
Don’t hesitate to contact the internet sales department of the dealership to get a quote before visiting the lot. The salesperson won’t be able to lowball you when you already have the quotes with you from his or her dealership.
5. Things You Can Negotiate
Following are the things a lot of you may not know they can negotiate:
- Capitalized Cost: The cap cost is an ideal way to begin negotiations. You never buy a car until you try to negotiate its price, and it’s the same idea. You can begin by doing some online research in advance to determine the actual average sales price of the car. If you have decided to trade in your current car, make sure to get the best possible price for it too.
- Money Factor: It’s another thing you should negotiate because lowering your interest rate will lower your monthly payments. And you can enjoy some leverage as it is based on your credit score.
- Cap Cost Reduction: If you have played it smart and already negotiated a trade-in, you are in a good position on the cap cost reduction. However, there is no harm in checking out latest car lease deals to affirm that you aren’t missing out on any deal or manufacturer rebates.
- Excess Mileage Charges: Looking down the road, you should also negotiate those expensive excess mileage charges if you think you can probably drive more than your lease allows. Of course, the leasing company won’t waive off all the charges, but it is highly likely that you can reduce them by dealing with it before the lease rather at the end of the term.
- Buy-Out Price: Make sure you know the time span during which you can try to reduce the buy-out price, in case, you fell in love with your car and decides to keep it for two to three years.
6. Things You Can’t Negotiate
Here is the list of things you cannot negotiate:
- Acquisition Fee: When it comes to acquisition fee, you will have little luck to get rid of it. However, you can negotiate to have it rolled into your lease payments rather paying it up front.
- Residual Value: Since it is set a higher level of the food chain thereby, they cannot alter it. But, there is no harm in opting for a car with a high residual value as at the end of the term it will cost you less to lease it.
- Disposition Fee & Purchase Option Fee: When your lease term will come to an end, you will probably either pay the purchase option fee or disposition fee. But it depends on whether you buy the vehicle or not. Sometimes the purchase option fee or disposition fee is waived off when you lease another vehicle from the same manufacturer.
7. Check New Car Inventory
Make sure to check the new car inventory. If your ideal vehicle is in stock, you will have the upper hand in the negotiation. However, if the car dealer has to get your favorite vehicle from another location, it is likely that they may play “we are doing you a favor by going out of our way” card.
On the other hand, if you are taking a car off their hands, you’ll have the freedom to play the “I am doing you a favor by moving this vehicle off your lot” card.
8. Check Out Dealer Ratings and Reviews
When it comes to trying out a new restaurant, most of us would like to check out online reviews first. Unfortunately, we don’t do the same when it comes to leasing a car from the dealership, a place where our financial future is discussed and debated.
You can find several websites over the internet that offers a dealer ratings and reviews. Access these pages and read other customers’ experiences at various dealerships in your zone. Some online resources even have the clever strategy for checking out potential salespeople.
9.Visit Dealership on a Good Day
There is an old saying that perfectly summarizes the tragic reality and doesn’t hold true for grocery stores only “Never shop on an empty stomach.” Didn’t get it? Let me put it more plainly. If you visit a car dealer when you are feeling sick, tired, hungry, etc. there is a high probability you will be less clear-headed.
It will allow the salesperson to push you into a bad deal because you will be in a hurry and want to get over with the things fast. Go when you are fresh and ready to tackle the stress of negotiations.
10. Tag Along a Buddy
Bring along a buddy or backup when you will visit the dealership. Even if you are confident in your negotiation skills, there is no harm in bringing a person who can keep you on track. It could be a family member, friend or person from work who looks intimidating.
Bring someone who has the ability to point out the snares of a potential deal, stops you from falling for any sweet-talk trickery and won’t let you sway from your original budget goals.
11.Keep Your Smartphone With You
These days there are plenty of apps that can provide you real-time assistance with how to negotiate a good car lease—even during the negotiations. So don’t forget to bring along your smartphone. Make sure it’s charged and has an active internet connection. Keep it out to check what other customers have paid for the similar model at a dealership.
There are apps that even let users compare in-stock vehicles side-by-side at several local dealerships. Furthermore, the apps can aid you to calculate loan terms based on your budget or current negotiations. Some popular vehicle valuation and automotive apps can even show you all current sales, rebates, and incentives for a particular car in your vicinity.
With these apps at your disposal, not only you will be ready and armed with the right tools, but you can also send a clear signal to the salesperson that you are not the person they can take for a ride.
12. Negotiate Like a Purchase
In order to get the best deal, negotiate the capitalized or cap cost first as though you intend to buy the car outright. In fact, it would be better if you won’t mention leasing until you and dealer come to an agreement on a price.
13. Check Manufacture Date
Often times, customers overlook this key bit of information when browsing cars at a dealership. Checking the manufacture date could give you extra leverage. Sure, you should check the car’s window sticker to find out things like price and miles per gallon, but don’t forget to look at the manufacturer’s sticker. Typically, it is found on the driver’s side door in a vehicle.
You will find the date and month in the upper left-hand corner of the sticker, which will tell you when the vehicle actually rolled off the production line. Remember, the further in the past the manufacturer date is, the longer the vehicle has been sitting on the lot. Meaning, the dealer has had to pay more carrying costs on the vehicle. So they are ready to get rid of it as soon as possible.
14. Don’t Be Afraid to Walk Out
If it appears you are not getting anywhere with a salesperson, be ready to walk out of that door. One of two things will happen: Either the salesperson will stop you halfway out in an effort to sweeten the pot, or he will simply let you leave. In that case, you can go and find another dealership that is willing to lease vehicles on your terms.