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How to Negotiate a Good Deal on a Car Lease
CarMan@Edmunds
Member Posts: 38,514
in General
The following guide explains how to negotiate an attractive deal on the vehicle that you want to lease.
Step 1: Determine if you are a good candidate for leasing.
Leasing isn't for everyone. If like to get a new vehicle every couple of years and keep your driving to around 15,000 miles per year or less, then leasing may be for you. On the other hand, if you generally keep your vehicles for a long time or put a ton of miles on them, you may be better off financing or paying cash for your new vehicle.
Step 2: Decide what vehicle you want.
Next you need to decide what vehicle you want to lease. Do some research on-line on sites like Edmunds.com and develop a list of possible candidate for your new vehicle. Then go to a few dealers and see the vehicles in person. While reading reviews about vehicles is great, it's no substitute for seeing a car or truck in person and driving it. Make sure not to finalize a deal with any dealer before researching how much the vehicle you want should cost.
Step 3: Decide how long a lease you want.
Once you know what vehicle you want, you have to decide how long you want to lease it for. Generally speaking, the longer one leases a vehicle for, the lower its monthly payment will be. There are exceptions to this rule, but this is usually how leasing works because with longer leases one is able to spread the large initial depreciation hit that vehicles' experience out over a larger number of payments. The "sweet spot" for most new vehicle leases is usually 24 to 39 months. These are the terms that manufacturers usually provide lease support on. One really shouldn't lease for any longer than 48 months or so. Four years is a long time to be committed to a single vehicle. Over the course of four years, your life could change, causing you to need a larger vehicle, or put many more miles on your vehicle than your lease allows.
Step 4: Determine what mileage allowance you need.
Now you need to decide how many miles per year you will need to drive your leased vehicle. The higher your leased vehicle's mileage allowance is, the higher its monthly payment will be. Most people drive from 12,000 to 15,000 miles per year. The majority of banks that lease new vehicles offer 10,000, 12,000, and 15,000 mile per year leases. Some banks offer more options and some offer fewer. If you need to drive more than 15,000 miles per year, you will probably have to purchase additional miles on a per-mile basis. It is usually less expensive to do so at lease signing than it is to wait until lease-end and have to pay an excess mileage penalty.
Step 5: Negotiate an attractive selling price.
One of the most important numbers to focus on when leasing is the selling price of the vehicle that you want. Always remember that the selling prices of leased vehicles are negotiable, just as if you were paying cash for or financing them. You should be able to get a good idea of how much you will have to pay for the car or truck you want by looking up its Edmunds.com True Market Value, and by visiting the "Prices Paid: Buying & Leasing Experiences" forum at Edmunds.com to see how much community members there have paid for similar vehicles lately.
Step 6: Find out what your vehicle's money factor should be.
Now that you know how much you want to pay for your new vehicle you need to find out what sort of lease program is available on it. Manufacturers' captive finance companies, banks that are owned by automakers, often have the most attractive lease program for cars and trucks. This is because the manufacturers provide special low lease money factors on vehicles to make their payments attractive so that they can sell more units. It is important to know what the "buy rate" lease money factor is for any vehicle that you want to lease. The "buy rate" is the number that is published by the bank that you want to lease through and it is the lowest possible money factor that is available on it. One should know this number when leasing because dealers often have the authority to "mark-up" vehicles' money factors to add additional hidden, back-end profit to deals. You may be able to find out what the current lease program is like for the car or truck that you want by paying a visit to the aforementioned "Prices Paid and Lease Experiences" forum at Edmunds.com.
Step 7: Finalize your deal.
Now that you know how much you should pay for the vehicle you want and what its money factor should are in good shape because these are the two main profit centers for dealers on leased vehicles. Comparison shop with a few dealers in your area to get an attractive price on the vehicle that you want and have the dealer that you decide to lease from calculate your vehicle's monthly payment using its "buy rate" lease money factor.
Step 8: Enjoy your new ride.
Now that you've negotiated an attractive deal on the car that you want, drive it off the lot and enjoy...just make sure not to pick up any speeding tickets
.
Car_man
Host
Prices Paid: Buying & Leasing Experiences Forum
Step 1: Determine if you are a good candidate for leasing.
Leasing isn't for everyone. If like to get a new vehicle every couple of years and keep your driving to around 15,000 miles per year or less, then leasing may be for you. On the other hand, if you generally keep your vehicles for a long time or put a ton of miles on them, you may be better off financing or paying cash for your new vehicle.
Step 2: Decide what vehicle you want.
Next you need to decide what vehicle you want to lease. Do some research on-line on sites like Edmunds.com and develop a list of possible candidate for your new vehicle. Then go to a few dealers and see the vehicles in person. While reading reviews about vehicles is great, it's no substitute for seeing a car or truck in person and driving it. Make sure not to finalize a deal with any dealer before researching how much the vehicle you want should cost.
Step 3: Decide how long a lease you want.
Once you know what vehicle you want, you have to decide how long you want to lease it for. Generally speaking, the longer one leases a vehicle for, the lower its monthly payment will be. There are exceptions to this rule, but this is usually how leasing works because with longer leases one is able to spread the large initial depreciation hit that vehicles' experience out over a larger number of payments. The "sweet spot" for most new vehicle leases is usually 24 to 39 months. These are the terms that manufacturers usually provide lease support on. One really shouldn't lease for any longer than 48 months or so. Four years is a long time to be committed to a single vehicle. Over the course of four years, your life could change, causing you to need a larger vehicle, or put many more miles on your vehicle than your lease allows.
Step 4: Determine what mileage allowance you need.
Now you need to decide how many miles per year you will need to drive your leased vehicle. The higher your leased vehicle's mileage allowance is, the higher its monthly payment will be. Most people drive from 12,000 to 15,000 miles per year. The majority of banks that lease new vehicles offer 10,000, 12,000, and 15,000 mile per year leases. Some banks offer more options and some offer fewer. If you need to drive more than 15,000 miles per year, you will probably have to purchase additional miles on a per-mile basis. It is usually less expensive to do so at lease signing than it is to wait until lease-end and have to pay an excess mileage penalty.
Step 5: Negotiate an attractive selling price.
One of the most important numbers to focus on when leasing is the selling price of the vehicle that you want. Always remember that the selling prices of leased vehicles are negotiable, just as if you were paying cash for or financing them. You should be able to get a good idea of how much you will have to pay for the car or truck you want by looking up its Edmunds.com True Market Value, and by visiting the "Prices Paid: Buying & Leasing Experiences" forum at Edmunds.com to see how much community members there have paid for similar vehicles lately.
Step 6: Find out what your vehicle's money factor should be.
Now that you know how much you want to pay for your new vehicle you need to find out what sort of lease program is available on it. Manufacturers' captive finance companies, banks that are owned by automakers, often have the most attractive lease program for cars and trucks. This is because the manufacturers provide special low lease money factors on vehicles to make their payments attractive so that they can sell more units. It is important to know what the "buy rate" lease money factor is for any vehicle that you want to lease. The "buy rate" is the number that is published by the bank that you want to lease through and it is the lowest possible money factor that is available on it. One should know this number when leasing because dealers often have the authority to "mark-up" vehicles' money factors to add additional hidden, back-end profit to deals. You may be able to find out what the current lease program is like for the car or truck that you want by paying a visit to the aforementioned "Prices Paid and Lease Experiences" forum at Edmunds.com.
Step 7: Finalize your deal.
Now that you know how much you should pay for the vehicle you want and what its money factor should are in good shape because these are the two main profit centers for dealers on leased vehicles. Comparison shop with a few dealers in your area to get an attractive price on the vehicle that you want and have the dealer that you decide to lease from calculate your vehicle's monthly payment using its "buy rate" lease money factor.
Step 8: Enjoy your new ride.
Now that you've negotiated an attractive deal on the car that you want, drive it off the lot and enjoy...just make sure not to pick up any speeding tickets
.Car_man
Host
Prices Paid: Buying & Leasing Experiences Forum
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Comments
Most people don't know this , but just because 2 cars have the same MSRP , does not make them lease the same .
FOr instance , the Mercedes ML leases for under 500/month with zero down at this time and the ar has a 52k MSRP ; The same MSRP BMW X5 will lease for over 100 more ...so if you have both cars on the list , then it will be an easy choice
2. Decide what car leases the best and go for it
* Auto Brokers are usually a good way to shop for a car , as they can help you compare more that one brand in the same place , and usually a broker will give you a straight answer when it comes to vehicle comparasing
I hope it helps,
D.
I was cautious going through the process with a broker, as everything is done over the phone, but was totally impressed by the experience.
As previous poster mentioned, brokers are more direct and give you the price which is better than any dealer "best deals". We started with few dealers and thought we negotiated the best price, but broker came in at lower payment for the same car.
I also appreciated that with a broker we didn't have to deal with sales agent going back and forth to his finance manager for the price, I am tired at that game.
Brokers are also great in comparison shopping, if you are not decided on the car you want. They give you lease prices on several similar cars and also alert you on any specials in effect.
The drawback of going through the broker is that you are not able to see and drive the car, but you can stop at you local dealer showroom and see the car in person.
And to top our pleasant experience - the car was delivered to our door
There are places like this one http://www.lease-specials.com that show you prices upfront without the need of pulling credit and going to the dealer , and this makes the car buying experience simple and painless
Daniel
Good observation.
Our leasing broker has deals listed on their web page, so one can check the deals and have an idea on pricing before talking to the broker.
There are quite a few of leasing broker in business, I am surprised they are not as popular as brick & mortar car dealerships.
There are a couple big ones in southern California like Carsdirect or http://www.bestcarpurchase.com/
that you can use to shop online , plus manny more local nitch auto brokers serving their local communities; It is very typical for the korean community to have a local korean broker , or the armenian community and so on .
D.
It will be the the dealer who will complete paperwork on your lease and deliver the car to you.
I'll get a legitimate quote from a dealer or through Zap.com on Consumer Reports, and take that quote to another dealer.
And their reply will be: "Thank you for the opportunity but again I can not touch that-if a dealer is willing to take a loss on his vehicle than so be it-good luck I hope it turns out well for you."
Something about that line seems fishy, as if to give you a phony guilt trip or something.
Any thoughts on this?
So when a dealer tells you that they cannot do the price , they probably don't want to do that price because of a small proffit (keep in mind that the salesman gets a percentage of the proffit , so he may not be interested in selling a car for a mini deal of 50$ or 100$) , or simply that dealer did not meet the quota last month and they don't have all the incentives from the factory .
That's about it for today ,
Only advice : Use an Auto Broker when buying a new car , or be prepared to do the research and shop at least 5 dealers , to make sure that you get a good price . Also just because a website told you a price , does not meen that is a good price for thatmonth . I have seen sites like truecar that give a average price , and we could beat that price by more then 5.000
I currently have a lexus with approx. 3,000 in negative equity. I would like to trade in my car and possibly lease to keep my payments lower then financing a new vehicle. Would this would be a good idea? I would be interested in a mercedes c class or audi a4/a5. What would be the best plan of action for this situtaion , so I know what I am getting into when I go to the dealer.
When you roll negative equity into the next vehicle it means you're even further upside down on it's loan. It'll take longer still to hit the break even point and actually gain some equity. You will likely also wind up paying more in interest changes and may not qualify for the best loan rates and/or be forced to carry (and pay for) gap insurance.
Financially, it just doesn't make sense.
Of course, finances aren't everything. If the Lexus no longer fits your life - no longer holds the entire family, lost job & can't afford payments, etc. - then trading it in may be the appropriate thing to do.
Personally, I buy cars that I believe I'll be comfortable with for 8 or more years. By doing so I enjoy several years with no payments and have positive equity to use when the time comes to buy my next car. My last car I bought in Feb '99 with 15% down, financed the rest for 2 years so it was paid off in early '01, and kept it until Dec '09. I enjoyed eight and a half years without payments and was never in a negative equity position.
I want to lock the deal by end of year but I don't want to visit a lot of dealers, as I have a small child and a long commute to work -- time is short/precious. What's the best way to make sure a dealer is serious before I make a trip out to them? Any tips? I've already driven the car, and I really like the ride, interior and features. Also I've seen prices on here and looked up the invoice and it should be well within my price range. So far the dealers only want to talk MSRP terms on the phone and even the one dealer I have visited in person.
Just google Auto broker in your area and see what you can find
Good luck
Daniel
1. Unfortunately, there isn't a law requiring auto makers to publicly disclose their lease money factor rates (interest rate) or their residual rates 9calue of car after duration and miles are put on.) This makes it *very* difficult to compare lease incentives across different comparable makes, models and trims. I wish there were a law enacted that would force this information to be as clear as auto loan interest rates are today.
2. Somehow, Car_man who is a "host" on these excellent Edmunds Forums, seems to thankfully have access to nearly unlimited lease money factor and residual info from most makers, and for years has been reporting very accurate information in reply to each individual request. But he is only one man, and it can take some days for him to get back to each person. I have always been super curious, Car_man, where *do* you get this information, and how come we all can't just get to the data directly? I know of course, it's not up to you, but can you give us some insight on how you gather this info? And why edmunds.com can't or won't just publish this extremely valuable data in an open manner? Of course, thank you for all the information that you *do* pour out every day Car_man.
3. The best always accessible website that I have found that has a good amount of detailed lease info for many cars, is this link below (sorry Edmunds, it's from cars.com). It is *not* always accurate, and should be taken with a grain of salt, but I have found it to be helpful, but not nearly as accurate as Car_man. Note that this site lists money factors as a percentages, which is actually the money factor number times 2400 (for example MF 0.0006 x 2400 = 1.44%) to get a fairly comparable number to standard auto loan interest rates. Just enter you zip, and then click into each model and trim to see detail lease info.
http://www.cars.com/go/advice/incentives/index.jsp
4. Each dealer *should* be able to provide you MF and Residual for a specific car, with a specific lease length in months, and miles per year. But you have to "get involved" with a sales guy to begin to extract this kind of info. Ugh.
5. There is a company called ALG that publishes a "residual guide" each quarter of what they recommend as the residual for each model and trim, after different lease lengths of time, and different mileage usage. They *will sell* you a single copy of their "Residual Percentage Guide 2012 Models National" book for about $50 by calling the number on this link, 1-805-898-8400. The manufacturers *do not* always match these residuals all the time, but it *is* a fair way to generally see what models and trims would give you a relatively cheaper monthly payment, due to holding their value better.
https://www.alg.com/products/guidebooks.html
Hope this helps everyone.
John Gettler
Option 1 - Custom built online Hatchback, panoramic sunroof, Red, Premium Package 2, Heated Seats, Arm rest, Automatic, Heated Seats, 16" black 6 star wheels, Rooster red trim on dashboard, upgraded stereo. $25,296; Residual .65; 10,000 miles; $950 down with a $343 monthly payment
Option 2 - Same as above but with $2000 down and a $302 monthly payment
Option 3 - Premium Package 2, automatic, center armrest, (NO updated stereo, heated seats, or 16"wheels) - $$23,500; Residual .65; 10,000 miles, $908 down with a $322 month payment
Option 4 - Same as Option 3 but with $2000 down and a $289 monthly payment
Option 5 - Purchase a used 2010 Black Mini Cooper S, panoramic roof, 23K miles, NO heated seats, NO upgraded stereo, $19,500
Thanks in advance!
What I'm hoping to get here is some guidance on how to begin the conversation with a salesperson regarding negotiating the price of the care the lease is based on. Can anyone offer suggestions? I would be most appreciative.
Once you have the following information:
MSRP
Selling Price after dealer discount and all incentives
Buy Money Factor
Residual
Miles / Yr
All applicable fees (lease acquisition fee, registration fee, etc)
**NEVER PUT MONEY DOWN ON A LEASE** (Also known as capital cost reduction)
Use a lease calculator to calculate the lease yourself and send the results along with the lowest quote you got by email to multiple dealers. Get the dealer to send back written verification of the entire deal. Only agree to visit the dealer in person once every last detail of the deal is ironed out.
Always remember that you have the power when you are dealing by email / phone. Once you are at the dealer they are the masters of wearing you out by taking hours and hours to agree to each concession and making you feel guilty.
Yes - this process is arduous, but if you are not so picky about the make and model and are willing to go for the best available lease deal and follow the steps above, you will save about 10% off MSRP compared to the typical dealer. You can lease $40,000 vehicles for under $300/mo and sometimes for only 24 months so that you get a new car faster.
I'm definitely doing more work online/via e-mail this time. My current dealer has had me in so many times and offered bad deals, that is part of the reason I'm thinking about going to a completely different manufacturer altogether.
or
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Not a bad deal for a $40K car, but it isn't $269....
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They advertise it for $249/mo with $999 cap cost reduction and $700 acquisition fee. Amortizing those would add $71/mo for $320/mo. Infiniti should allow 9 multiple refundable security deposits to bring the interest rate down. You should also be able to negotiate a better deal than advertised.
The MSD program is great.... I did that on my wife's G37XS... saved around $60/mo....
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Late last summer Infiniti did a zero down 18 mo lease and sold a ton of cars.
Truecar prices are essentially set by the dealer. While they may appear low they do not reflect any negotiation which usually results in a better deal.
Carwoo is a better choice as it allows buyers to negotiate with dealers without disclosing personal information.
While much of the preliminary negotiation can be handled over the internet or phone, the best deal will almost always be attained via a face-to-face negotiation with the dealer.
The car buying process is indeed arduous. But it is equally difficult for the sales person who does not get paid if the buyer does not buy. In that regard the buyer has the upper hand.
The buyer can always walk to another dealer. However, the sales person knows if a person walks they will not likely return. If the sales person believes a buyer is ready to leave most sales people will immediately provide a better price. Feet are a buyers best negotiation tool.
There are no dealer fees which are mandatory. Dealer fees, by definition, are set by the dealer and are part of any negotiation. The only mandatory fees are those set by law or regulation.
It really accomplishes nothing to attempt to hide things from the sales person such as a trade in vehicle. Sales people sell for a living and they deal with every imaginable type of buyer.
To get a good deal identify the invoice price of the vehicle, any incentives available to both to the buyer and the dealer, dealer holdback, and use Edmund's forums for prices paid information. A good method to arrive at a price goal is to take the invoice less incentives less holdback and add a few hundred for dealer profit.
Research the trade value using Edmunds, KBB, and NADA. Taking an average of these three is a good approach.
Research the credit profile. Credit Karma is a good site to obtain a free estimate of a credit score.
With the right information a person can always get a very good deal.
Low advertised lease prices are designed to entice people to consider the lease. Anyone who believes they can lease a $60K vehicle for only $350 has not read the small print.
Mercedes never advertised this deal - but several buyers were savvy enough to recognize it and negotiate it.
A reporter would like to speak to a car shopper under the age of 34 who is unsure whether you should lease or buy. If this is you, please send your daytime contact info to pr@edmunds.com by Friday, May 2, 2014 at 10 a.m. PT/1 p.m. ET.