According to some experts, you should not inform your car dealer how you plan to go about your car financing. You should wait a little bit until a price is established and then inform that you wish to lease a car. Well, that is not sound advice. And it does not work well anymore.
The dealer salesperson should know that you wish to lease and that you have information about car leasing and willing to discuss the selling price not only monthly payments. Also, let the car dealer know that if he gives you a fair deal, you might end up car leasing today or leave and find another car and dealer.
Listed below are the three key advantages you have in any car lease negotiation and should use:
- You can look around, do your research, and find the best car lease deal
- You can walk away if you the salesperson at the dealership does not offer you a good deal
- You can prepare beforehand and educate yourself regarding cars, their prices, and car leasing
How to Negotiate a Car Lease Deal
Here a few steps regarding car lease negotiation:
Prepare Yourself for Negotiation
This process is going to be a breeze if you have done your research. In case you haven’t, the entire process could be lengthy, exhausting, and of course, expensive.
Firstly, negotiate the lease price, which is also called cap cost with a particular target price in mind. Your monthly payment is going be less if the price is low. Don’t believe them if they say that price is not negotiable in a lease. It is an old trick that doesn’t work anymore. Remember, price is always negotiable in a car lease unless you want to get a popular top-selling car that is in short supply.
You should know what other people are paying for the same car you want. This is one of the most useful things to know when you set out to negotiate car prices. If you don’t do that, you wouldn’t even know the price you are negotiating for particularly if there is a chance of hidden incentives. So, research is extremely important.
Residuals and Money Factor
As a dealer controls the price only, do not expect a successful negotiation regarding money factor and residuals. It is the dealer’s leasing company which controls the money factor and residuals. The dealer just acts like their agent.
But you can ask them if they collaborate with any other leasing finance companies that might offer better car lease terms you. The next thing to do is inquire about any advertised specials, rebates, discounts, or factory-to-dealer incentives that would lessen your capitalized cost. You should inform them if there is any down payment you would like to put down and negotiate a fair price for your trade-in. See that you are aware of the wholesale value too and get yourself educated about acquisition fees, disposition fees, or any other charges that can impact your cost.
What to do once you get the deal
After you get the deal, ask the dealer to calculate your monthly payment amount without the sales tax on the figures that both the parties have settled on. The salesperson would check with the Finance and Insurance (F&I) Manager to calculate. While he does that, you calculate the numbers on your own and countercheck the payment figure they have brought against your own.
Also see that you both are using the same cap cost, down payment (cap cost reduction), money factor, residual values, and the lease months the dealer is using. Make sure that you also include extra costs, if any, which you are not paying up-front in cash.
If you see any discrepancy in their calculations, then ask them to explain it to you in detail. In most cases, these discrepancies happen because of error of omission such as an extra/hidden fee you were not made aware or wrong credit for your trade-in.
In case you don’t need to negotiate
You now know that musts of negotiating a lease deal but, in some cases, little or no negotiation is needed. When you come across attractive car lease deals in the newspaper, on TV or the internet, you should know that they are special car lease deals which are presented jointly by the car manufacturer and the car dealer.
Most of the time, these promotional offers are good deals, and there is no need for further negotiation. Also, due to special conditions for deal acceptance, there is no room for negotiation either. The different elements of the car lease deal such as lease price, money factor, term, residual, and vehicle make, model, and style are fixed and cannot be changed. Most of these deals are better than those you could have negotiated yourself.
The thing with these special deal is that they are available for only a few types of car models and styles. These deals happen to be for a limited period. If these deals offer the model or style you are looking for, then it is good for you. If not, then you’ll you will have to opt for the good old method of negotiation.
Handy Tips for Car Lease Negotiation
Here are a few important tips that will assist you in your car lease negotiations:
- Never allow any dealer to tell you that their car lease prices are non-negotiable.
- Unless you are aware of how the monthly lease
payments are calculated, always negotiate the price, not the monthly payments.
- Never admit this to your dealer the monthly
payments you can conveniently afford. Rather, give him price unless, again, you
know how payments are calculated from price.
- Always go with complete knowledge and dealer invoice price for the vehicle you are interested in getting.
- Avoid telling your dealer about your source of
invoice prices or trade-in values. It is not that your prices are wrong, but
they could be different than his.
- Never sign a purchase/lease agreement until you
have settled the terms of the lease.
- An old trick, but do not show your attraction
towards the vehicle during the negotiations.
- If the negotiation doesn’t go your way, you are
free to walk away.
- Negotiate UP from the dealer’s cost not down
from sticker price.
- Avoid giving the dealer a deposit to hold the
car. There is no such thing. The car will be there when you get back.
- Do not take a car home if you have poor credit.
Wait until the dealer’s finance company approves your credit.
- If you are not comfortable with a salesperson,
ask for another. If you feel they are being dishonest or playing games with
you, ask them to stop or that you will leave.
- Let your background research show. Inform the
dealer that you know about how things work in car leasing.
- Never accept the offer to take a car home before
you have settled a deal.
- Never agree to extended warranties, security
devices, credit insurance, or any other additional add-on services.
- The ideal time to deal is at the end of the day,
month, weekday, rainy day, or any slow period. This works.
- Do check the dealer’s monthly lease payment
figures against the ones you have calculated.
- Avoid negotiating for a deal when you are desperate, in a rush or short on time.