New car buyers try to master the techniques of negotiations before even walking onto a car dealer’s lot, but when it comes to leasing a new vehicle, many consumers don’t give it a second thought. Wrongly they assume the lease price is what it is and don’t try to negotiate. It turns out dealers also have a lot of wiggle room with leases, but it is the consumer’s job to ask. You can negotiate a lower sticker price, which will mean a smaller monthly payment. Additionally you can negotiate a better interest rate you pay on your car loan, here’s a look at four ways to get a deal on an automobile lease.
Knowledge Is Power When Negotiating
Successful negotiations come from doing a lot of research and legwork up front. In the case of a car lease, that means finding out the real value of the vehicle you are thinking of leasing before visiting a dealer’s showroom. When researching vehicle prices you want to know the sticker price and the manufacturer’s suggested retail price as well as the retention value of the car. Cars that have a higher residual value usually have lower monthly lease payments because the car dealers can quickly turn around and sell the car once the lease is over. Armed with that knowledge you will be able to spot areas where there is room to get a lower sticker price or know when it's time to walk away.
Get Rid Of The Down Payment
One of the knocks on leasing a vehicle is that you have to put a few thousand dollars down before you can drive off with your new ride. This down payment often discourages people from trying to lease a car; however, the down payment can be negotiated. If the dealer doesn't lower the amount due at signing, you should at the very least be able to get the down payment worked into the monthly lease payment. You’ll still have to pay it, but you won’t need the money up front.
Even the cost of extra miles can be negotiated. Going over your allotted mileage for the year can get costly, but the dealer may be willing to waive the overage fees or give you more mileage. The key is to ask. If you can’t get the fees waived, and you think you may go over the mileage, then buy them up front. Often the dealer won’t charge you if you don’t use them.
Know The Money Factor
When it comes to the interest rate you will pay on your lease, a lot of it is going to depend on your credit, but lenders have wiggle room there as well. Spotting your interest rate can be a little more complicated than with say a mortgage because when leasing the interest rate is referred to as the money factor. The money factor is the amount you’ll pay in finance charges each month. It is expressed typically, in a very tiny number like .00275. To figure out the annual percentage rate (APR), car buyers have to multiply the money factor by 2,400. If the money factor is .00275, then the APR is 6.6%. If you don’t like the money factor ask the dealer to work with a different financing company or go to the next dealer down the road.
Comparison Shop Beyond The Sticker Price
For certain vehicles that have a high residual value negotiating the sticker price isn’t going to yield you any savings. But there are other things you can get the dealership to forgo. For instance the length of the lease—while it may be attractive to have a longer lease and thus smaller monthly payments, any lease that goes beyond the car’s factory warranty is going to be costly. After all, the last thing you want to do is drive around in a leased car that isn’t covered if something major goes wrong.
The Bottom Line
One of the attractions of leasing a car is that you get a brand new one every few years, and you don’t have to worry about long-term maintenance. It's important to note that you can also negotiate when leasing a car. By doing your homework ahead of time and shopping around you can ensure you get the best deal on your next car lease.