How To Negotiate A Car Lease (Like An Expert)

Much like purchasing a new car, you can also negotiate a car lease price with the dealership.

Just like when it comes to the initial decision of leasing versus financing a vehicle, you’ll find that arming yourself with the right information is essential in negotiating a car lease.

10 Tips for Negotiating Leases

The following ten tips for negotiating leases positions you for getting the best deal on things such as your trade-in, monthly lease payment, down payment, and lease agreement.

1. Understand Lease Terms

The world of car leases comes with its own set of lease terms. Familiarize yourself with them so you can better negotiate your lease agreement.

Money Factor

Think of the money factor as being the same the interest rate you typically pay on other types of car loans. The confusion regarding the money factor often focuses on the way it’s written.

If the dealership quoted you a money factor of .002, for example, multiply it by 2,400 to find the more familiar annual percentage rate (APR). In this case, the APR would be about 4.8 percent.

Capitalized Cost

The capitalized cost — or cap cost — of the new car is the price the dealership is asking. This is often an excellent place to start when negotiating your car lease.

Residual Value

Sometimes the dealership or leasing company will refer to the future value of the vehicle. This is also known as its residual value. The lessor will typically use data from a third-party company like ALG to determine the vehicle’s projected value at the end of your car lease.

Acquisition fee

The acquisition fee is charged by the dealership or leasing company to cover their costs of doing your paperwork, drawing up the lease agreement, and things of that nature. In a few cases, you might be able to negotiate the acquisition fee.

Due at Signing

The due at signing amount is what you’ll need to pay to drive the new car off the dealership’s lot. Items like the down payment, security deposit, and first month’s payment are typically included in this amount.

Salesman send key to customer after good deal agreement and receive money, successful car loan contract buying or selling new vehicle.

Cap Cost Reduction

While cap cost reduction isn’t directly related to lease negotiations, it can still bring down the cost of your new car. This can include items like lease deals offered by the dealership or your trade-in’s value.

Buyout Price

One of your end of lease options will be to purchase the vehicle from the dealership. This buyout price is what you’ll pay to do so.

Disposition Fee

At the end of the lease, you’ll be responsible for paying a disposition fee. This covers the costs of refurbishing the now- used car and preparing it for resale.

2. Know that Car Lease Prices are Negotiable

It’s important to know that car lease prices are negotiable. The final price you pay is based on factors such as buyout price, trade-in value, money factor, and more.

When negotiating the price of the car, start with the dealership’s price and not the sticker price. Ask about any rebates, lease deals, and other cost reduction offers the dealership or leasing company has that you can take advantage of. During lease negotiations, emphasize that you want their best lease offer. Sometimes you can even negotiate a few hundred dollars off just by paying the “due at signing” amount with a check or cash rather than paying by credit card.

Money Factor

In addition to the current lease money factor rates being somewhat negotiable, you can improve your chances of getting the best lease terms by having an excellent credit score.

Buyout Price

Adding the buyout price to your lease negotiations won’t change the upfront amount you’ll have to pay or your monthly lease payments. However, you might not have the opportunity to negotiate it at the end of the lease, so now’s the time to do so.

Mileage Limits

Knowing how many miles you drive annually is important when negotiating your car lease. If you suspect you might come close to the mileage limits set in your lease contract, negotiate now for an increase in that cap. You can also try to reduce the charge levied for going over the mileage limit.

Capitalized Cost

Know the price of the vehicle by researching it before you negotiate the lease. Research on Edmunds to get a good idea of the average selling price. Use the true value of the car — which often depends on the demand within your local market, among other factors — as the basis of your lease negotiations.

Cap Cost Reduction

The cap cost reduction also involves you getting the best price for your trade-in and taking advantage of any lease deals that are in effect. These can reduce the amount you due at signing or your monthly lease payments

3. What’s Not Negotiable

There are some things related to a car lease that simply aren’t open to haggling during lease negotiations. Knowing what these are upfront can save you time and get you driving away in your new car faster.

Registration and Taxes

Just as if you were to purchase a new vehicle, the registration and taxes associated with it aren’t negotiable. These are usually set by government agencies or state law. You’ll usually have to pay these upfront as part of your lease contract.

Residual Value

The dealership and leasing company rely on independent organizations to set the residual values of new cars. You won’t usually find them veering away from the predictions of these experts.

Acquisition Fee

In a few rare cases, a dealership might negotiate their acquisition fee. If you find them unwilling to do so, ask if they will roll it into your monthly payment. Doing this means you don’t have to pay it upfront.

Disposition Fee

While the disposition fee is often not something the dealership or leasing company will negotiate on, you might be able to convince them to waive it. You’ll need to wait until the end of the lease approaches. If you agree to a new lease agreement on a new car from the same dealership or brand, the disposition fee might be waived.

4. Find the Right Vehicle

It might go without saying, but the right vehicle for you is not necessarily going to be the same one that your neighbor or your best friend might choose. You’ll also want to do your due diligence and research the new vehicle to determine if it has good reviews.

Choosing a new car that has a high residual value provides you with room to negotiate the lease agreement. From its selling price to the resale value, the right new vehicle gives you flexible options throughout the lease term.

5. Consider the Total Lease Cost

It’s easy to focus on your monthly payment when approaching lease negotiations. For the best results, though, consider the total lease cost. This includes your down payment, the fees charged by the dealership or leasing company, and taxes.

Do some simple math to get the total lease cost. First, multiply the number of months in the lease term — minus one month because your first payment is usually rolled into the amount you pay when you sign the lease contract — by your monthly lease payment.

Add this figure to the amount that’s due at signing. This includes any fees and charges from the dealership or leasing company. The sum of these two figures is your total lease cost.

6. Search for Lease Deals

One of the best ways to negotiate a car lease is to search for lease deals. These are often subsidized by the automaker in an effort to move a new vehicle more quickly. Taking advantage of a lease deal can reduce the amount due at signing, your monthly lease payment, or both. In many cases, lease deals are available only if you have a great credit score.

High Credit Score number on a report. Artwork created by the photographer.

7. Lease a Vehicle in Stock

If you choose a new car that’s already in stock at the dealership, you’re more likely to be successful when it comes to lease negotiations. Dealerships have a greater incentive to make a lease deal and move new vehicles off their lots than when you special order a new car.

8. Estimate Your Mileage Accurately

The mileage limit that’s included in your lease agreement is a number that’s vitally important when considering the pros and cons of leasing a car. Going over that mileage limit can significantly increase the cost of leasing the car. Make sure you have an accurate estimate of the number of miles you’ll drive during the lease agreement.

9. Reconsider Add-On Costs

GAP insurance will almost always be a requirement for every lease contract. Even if it’s not, it’s a good idea to invest in it for your own peace of mind in the event that the unexpected happens. It protects you — and the leasing company or dealership — if you total the car or if it’s stolen.

Don’t feel like you have to purchase GAP insurance from the dealership. You might find that it’s cheaper elsewhere. Check rates at your own insurance company, credit union, or bank.

10. Read Your Documents Carefully

After all your lease negotiations, take a few minutes to carefully read your documents before signing on the dotted line and driving your new car away. Make sure that all the agreed-upon numbers are outlined in the lease contract.

Double-check that the amount you have to pay upfront and your monthly lease payments is what you agreed to. If you spot any errors or blank spaces, be sure those are corrected before you sign.

By carefully following our ten tips for lease negotiations, it’s possible to find the new car of your dreams — and save money at the same time.

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