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How to negotiate a car lease Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make smarter financial decisions by offering you financial calculators and interactive tools that provide objective and original content. This allows you to conduct your own research and compare data for free – so that you can make sound financial decisions. Bankrate has partnerships with issuers, including but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The deals that are displayed on this site come from companies who pay us. This compensation can affect the way and when products are featured on this site, including for instance, the sequence in which they appear in the listing categories, except where prohibited by law for our mortgage or home equity products, as well as other products for home loans. This compensation, however, does have no impact on the information we publish, or the reviews appear on this website. We do not include the entire universe of businesses or financial offers that may be open to you.
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5 min read Published on August 9, 2022.
Written by Allison Martin Written by
Allison Martin’s work started over 10 years ago as a digital media strategist. Since then, she’s been featured in a variety of top financial publications including The Wall Street Journal, MSN Money, MoneyTalksNews , Investopedia, Experian and Credit.com.
Editor: Rhys Subitch Edited by Auto loans editor
Rhys has been editing and writing for Bankrate from late 2021. They are dedicated to helping readers gain confidence to manage their finances with precise, well-studied information that breaks down otherwise complex topics into manageable bites.
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Are you considering a car lease that lets you drive in style for less than what you’d spend to buy the new car you want? Learning about the process of leasing a car and learning the latest terms used in the industry and the details of lease agreements, is a crucial part of finding a bargain. Looking around and examining the deals and specials offered by various dealers is another great way to help you negotiate a lease agreement with confidence and ensure that you receive the best lease deal to meet your needs. If you visit the dealership to purchase an automobile the salesperson will expect you to offer below the price they are asking for. However, this isn’t often the case with lease deals, but there is a step-bystep method to negotiate a car lease. 1. Learn the jargon easy to become overwhelmed by the terminology, particularly if you don’t work in the automotive sector. However you could gain some advantage by knowing the terms dealers use prior to you go in front of a leasing agreement. Here are some commonly used lease terms used by dealers. Acquisition fee This fee sometimes called the assignment fee, or the origination fee is a charge imposed by the dealer in order to establish the lease. The amount of this fee can vary between a few dollars , according to Edmunds. If you don’t have the money to pay the purchase fees upfront when you sign the lease contract, it can be rolled into your monthly lease payment. Buyout price A lease buyout typically requires the purchase of a leased car at the conclusion of the lease or in some cases before the deadline for ending. The purchase price is the amount the dealer would charge, should you opt to do this. Reduced cost of capCap cost- or capital cost reduction are all upfront payments that lower the amount you can finance. This could include trade-in credits, incentives, rebate amounts or even a bigger down payment. Disposition fee Disposition fees pay for the costs associated with cleaning and preparing the vehicle to keep it in top condition to allow someone else to buy it when you return it. Gross capitalized cost The car’s sales price, also known as the market value is the gross capitalized cost. “This may be a fancy word to describe the cost of the car, plus any other fees tax, balances and balances,” says David Undercoffler the editor-in-chief of Autolist. Residual value The Residual value represents an estimate of what the car will be worth at time of lease’s expiration. This figure is determined by depreciation as well as industry information. “With the residual figure, the seller estimates the value of the vehicle worth after you trade it in,” says Mike Quincy who is an auto tester and writer for Consumer Reports. “It’s established at the start of the lease and used in calculating your base monthly payment.” 2. Find deals Google search for “special lease offers” isn’t enough to find the most value. Take your search a step further by making an inventory of the deals you come across and then consider expanding your search to areas outside of the city you live in. After you have the list of lease offers that you like on the top brands and models, make sure to call each dealer to confirm the particulars. Also, you should inquire about any other offers that aren’t advertised online. 3. Start the negotiations Once you’ve narrowed your options, make an appointment at the dealership. Take a test drive of the cars you are considering and start the discussions. The items that the dealer might be willing to negotiate include the purchase price. Do you intend to purchase the vehicle close the lease? If yes, the dealer may be willing to cut you a deal on the buyout price. “This is an excellent price to negotiate before the start of the lease when you believe there’s a chance you’ll want to buy the car at the end period,” says Undercoffler. Negotiating the purchase price upfront is crucial, because typically it’s not possible to negotiate this cost after the lease has ended, says Undercoffler. Disposition fee You may be able to be able to get a discount on the fee for disposition in the event that you do not intend to trade in the vehicle or exchange it to another lease once the lease agreement ends. It is important to discuss it at the start instead of trying to negotiate it after the expiration of the lease. Gross capitalized cost is often the reason that dealerships use low monthly payments as a marketing tool to attract buyers. But, it is important to consider negotiating the vehicle’s selling price that is also the gross capitalized cost. If you negotiate, you might be able to secure an affordable monthly payment without the need to consider extension of the lease. “The gross capitalized cost will impact the monthly installment and the final buyout value of the vehicle. This cost is 100 percent negotiable,” says Nathan McAlpine who is the proprietor of CarMate which is an auto broker firm. However, in certain situations, such as when dealers are offering a specific monthly lease special, this cost may be harder to bargain. In such cases the lease conditions are typically pre-determined, according to Undercoffler. The mileage allowance of most leases restrict the number of miles you may drive — often to 10,000 to 12,000 miles per year. If you exceed the limit each year it will result in the possibility of paying a fine. Do not be enticed into accepting an allowance for mileage that is low if you travel a lot. Instead, request a higher allowance at a reduced rate at the time of establishing the lease so that you can save money when you turn the car in. “If you know you’ll be driving more than the allowance of mileage is a great idea to negotiate a greater cap on your mileage in exchange for an upfront cost, or not charge at all, rather than getting hit with the per-mile penalty when the lease is over,” says Undercoffler. “Just be aware that if agree to a higher mileage limit that it will reduce the value of the vehicle and the buyout amount, since the vehicle will theoretically have more miles on it.” When you negotiate your mileage allowance, it’s important to know about how many miles per year you typically travel. “If you purchase extra miles in advance but you can’t claim the money back if you do not use them,” says Quincy. The money factor is the interest rate you pay for leasing the vehicle. If you have excellent to excellent credit — typically 740 or greaterit shouldn’t be any issues obtaining the lowest rate of interest that the dealership can offer. 4. Sign the contract You’ll need to go through the lease agreement prior to signing the contract. Lease agreements typically contain the following details the down payment required the amount of down payment, if any. The price of the lease which is sometimes referred to as the rent factor or money charge. Value of the vehicle at the beginning and expiration in the term. The annual mileage limitation. A detailed fee schedule, which includes the costs in wear and tear and excess damage and other charges that you could incur at the end your lease. Costs to terminate the lease early. What cannot be negotiated? Although you can negotiate several fees, there are some limitations. You won’t be able to negotiate the following fees: Acquisition fee: Dealerships generally won’t waive this administrative fee however they will let you add it to the lease payment should you need to. Residual value: This figure isn’t negotiable because it is a way to account for depreciation as well as industry statistics. Plus, lowering the value of residuals too much means the dealership could lose money if you choose to buy the vehicle rather than selling it. The bottom line is that it’s possible to get a good bargain on a lease for a car however you must do your homework before visiting the dealership. It’s not just important to learn the jargon dealerships use, but you should also evaluate offers from different dealerships, understand what is negotiable and study the fine print of the lease agreement before sealing the contract. Find out more
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Written by
Allison Martin’s career began more than 10 years prior to that as a digital content strategist, and she’s since been featured in a variety of top financial publications including The Wall Street Journal, MSN Money, MoneyTalksNews , Investopedia, Experian and Credit.com.
The edit was done by Rhys Subitch Edited by Auto loans editor
Rhys has been editing and writing for Bankrate since the end of 2021. They are passionate about helping readers gain the confidence to manage their finances by providing concise, well-researched and well-researched content that break down complex topics into digestible chunks.
Auto loans editor
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