Even though there is plenty of well-meaning financial advice discouraging car leases, there are also plenty of good reasons to lease a vehicle. True, if you stay in a lease, it's a bit like having a car payment for life, but on the other hand, you avoid the hassles of repair costs and getting rid of a used car that you no longer want. In fact, you might just like the idea of driving a cutting-edge, new car model every few years. The point of smart money management is to allow yourself to maintain the lifestyle you desire, and a lease can definitely fit into that. However, it's also easy to get into financial trouble with a lease if you don't negotiate a good deal from the beginning. The following are 10 tips on how to negotiate a car lease smartly.
Tip 1: Know the Numbers
A lease deal is more than just the basic sticker price of the car. Before you go in to negotiate a car lease, it's important to have the following numbers figured out:
- Down payment
- Total cost of the vehicle
- Mileage limit per month
- Buyout price
- Your trade-in value if applicable
For the latter number, it's a good idea to look up the value at Kelley Blue Book so the dealer doesn't attempt to offer you far less than it's worth.
Tip 2: Know Exactly What You Want
When you go to negotiate a car lease, one thing you don't want to do is just show up looking for any car. That's a bit like advertising that you want the most expensive thing they have, and more than likely that's what they'll try to get you into. Instead, do all your research before you go into the dealer. Find out the exact make and model that fits your needs and consider which options you absolutely must have and those that you can live without. Remember that decking your vehicle out with all the accessories will have you paying a premium for options that the next owner is going to benefit from more than you.
Tip 3: Check Out The Dealership Before You Go In
Don't just walk into any dealership sight unseen, but instead do your homework on the dealership that you're eyeing. If there's a car you like in their inventory, try calling their sales department and getting a quote. Coming in with a quote will make it a bit more difficult for a salesperson to start too high. Look at the dealer reviews and pay attention to any bad reviews talking about how the customer felt they were tricked or treated poorly. You might also consider dealing initially with the sales department over the phone or email to see how they treat you. If you feel uncomfortable or disrespected at any point during these interactions, you might have second thoughts about going directly into the dealership. It's generally harder for people to walk away when they're on a lot, or to be confrontational and ask the manager for a new salesperson.
Tip 4: Check The Inventory
Always check the dealer inventory before starting any negotiations. If it's sitting on the lot, it's counting against product that they need to move. However, if they have to go get the car from somewhere else, they can easily play the inconvenience card. If you're the one moving the car, you automatically have a bit of extra leverage.
Tip 5: Bring Someone With You
When you decide to go in to negotiate a car lease, it's important that you go when you feel good and also to bring someone with you. Don't go in when you're stressed, in a hurry, tired, hungry or just feeling bad. This will make you less able to think clearly and more likely to get pushed into something you don't want. Along with this, it's a good idea to bring an objective second person. Let the person know ahead of time what you're trying to do and they can then listen and get you back on track if you start to waver in your negotiations.
Tip 6: Hold Onto Your Phone
Keep your phone handy. In fact, keep it actively in your hand. You can use a range of apps to pull up tips for negotiation as well as price information on the car you're looking at. You can even keep inventory from other nearby dealerships a tap away. This shows the salespeople that you're ready to walk out and look at another dealership if they're unwilling to work with you.
Tip 7: Look At The Dates
One piece of information you might not know is how to check the manufacture date on a vehicle. Look at the window sticker on the car and focus on the top left corner, which should show a day and a month. This tells you when the car came off the production line. The further back that date is from when you are currently browsing tells you how long the car has been sitting at the dealer lot. The further back that is, the more interested the dealer will be in getting rid of it.
Tip 8: Negotiate Like You're Buying
One of the quickest ways people get into trouble with a lease is by only focusing on the monthly payment. This gives the dealer an opportunity to get you into a bad place by adjusting other parts of the lease agreement. In order to get the best deal on a lease, you should negotiate the actual purchase price of the car first. One way to stick to this is to not even mention that you're looking to lease until you can get mutual agreement on the purchase price of the vehicle. Then you can start talking options for financing, which would include leasing.
Tip 9: Learn All The Tricks
It's important to note that not all dealerships are out to scam you, but at the same time, they want to sell cars and plenty are not above using a range of little tricks to wrangle a better sale. A few common tricks used by salespeople are as follows:
Small lies like only good for today prices, someone else is coming in to see the car, only a few cars like this left in the state or your color is not available.
Bait and switch where they say your vehicle is already sold and then attempt to get you interested in a more expensive one
Showing an attractive monthly payment depending on you buying the car today
Offering a low amount for your trade
Paperwork mistakes and changing leasing numbers
Confusing you by combining the car price, down payment, trade-in and monthly payment
Dealer stickers with higher prices than MSRP
Tip 10: Be Ready To Leave
When negotiating a car lease, you should always be ready to walk out on the deal. If you're getting nowhere in talking to the salespeople, simply get up and leave. In some cases, the salesperson will try to stop you by giving in somewhere, in other cases, they'll simply let you leave and then you're free to find another dealership that will work with you.
Leasing Terms to Know
Capitalized cost - is the final price of the vehicle after negotiations
Cap cost reduction - refers to outside reductions such as a trade-in or manufacturer lease deals
Residual value - is the estimate of what the car will be worth after the lease contract is up
Buyout price - indicates the price to buy the car at the end of the lease, which might not always be the same as the residual value
Acquisition fee - is an administrative fee to cover the lease preparation cost
Disposition fee - refers to a charge paid at the end of the lease to prepare it for market
Due at signing - is an amount you'll need to pay when you sign the lease and drive the car home. It usually consists of the down payment, the first payment and then a security deposit if necessary.
Purchase option fee - is a fee added to the buyout price at the end