Leasing a car can be a great option for many drivers, especially if you have your heart set on a brand-new model. Car leases often have lower monthly payments than auto loans, and you get to drive a new car every few years.

Plus, you might even be able to negotiate your lease to get cheaper payments, higher mileage limits, or a lower buyout price. Before you visit the dealership, review these strategies for negotiating your car lease.

What Is a Car Lease?

Simply put, a car lease is a vehicle you rent from a dealership. In exchange for a monthly fee, you get to drive the vehicle for a specific length of time (often between 12 and 48 months). At the end of your lease, you return the car to the dealership, where you can purchase the vehicle or lease a new car.

Many drivers choose a lease for the low monthly payments, and to avoid the commitment of a long-term auto loan. Leasing a car often requires good or excellent credit, but the exact qualifications depend on the dealer and the type of lease.

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How to Negotiate a Car Lease

Certain aspects of a lease are usually set in stone, such as the lease acquisition fee and the car’s residual value.

However, there are lots of details that can be negotiated (depending on the dealership and the specifics of the loan agreement). Follow these steps to negotiate your lease agreement:

1. Learn About Lease Terms

During your negotiations, the dealer may use technical terms and language to describe the parameters of the leasing agreement. It helps to have an understanding of these terms and their meanings. Do some research online, review a leasing glossary, or talk with a leasing specialist to learn more. Here are some important terms to know:

  • Acquisition fee: An acquisition fee, sometimes called the assignment fee, refers to a one-time fee the dealership sets to cover the time, cost, and labor of creating the leasing agreement.
  • Capital cost reduction: The capital cost reduction includes any upfront payments you make to reduce your overall costs, including trade credits, incentive discounts, and extra down payment contributions.
  • Buyout price: In your lease agreement, the buyout price represents the price you pay if you decide to buy the car after your lease ends.
  • Residual value: A leased vehicle’s residual value refers to the value of the vehicle at the end of the lease, which factors in its mileage, condition, and depreciation.
  • Money factor: The money factor is a financing charge, similar to a loan’s interest rate, that you pay for your lease. You can multiply the money factor by 2400 to view the charge as an annual percentage rate (APR).

2. Compare Lease Deals

If you want to negotiate a lease, it pays to get quotes from a few different dealerships for the same vehicle. That way, you can use those quotes as leverage to negotiate a deal with the dealership you want to work with.

For example, if your preferred dealer sees that a competitor is willing to offer you a lower interest rate or increased mileage limit, they might be more willing to match that in order to win your business. You may also find that certain dealers or manufacturers offer special deals, such as lease incentives, discounted payments, and reduced interest rates.

3. Negotiate with the Dealer

Once you find a dealer or manufacturer that offers the leasing terms and vehicle you want, you can meet with them to negotiate the terms of your contract. While you can’t change every portion of the contract, some negotiable elements include:

  • Buyout price: You can often negotiate a reduced buyout price in your lease, so you’ll pay less if you decide to purchase the car at the end of the lease period.
  • Gross capitalized cost: The gross capitalized cost is the vehicle’s value at the start of the lease, plus fees. You can negotiate this value to get a better deal and lower monthly payments.
  • Mileage allowance: You can often negotiate to increase or decrease the mileage allowance depending on your needs.
  • Duration of the lease: You’re allowed to choose your lease period, but you might be able to negotiate a longer lease period if you want to keep the car for longer than the standard amount of time.
  • Money factor: The money factor is similar to an interest rate. You can usually negotiate with the dealer to get a lower money factor, which helps you pay less interest over time.

4. Sign a Deal

After you complete your negotiations and are satisfied with the outcome, the last step is to sign the agreement and get the vehicle. Make sure to closely read over the new agreement and fill out any necessary paperwork.

Ensure that the document accurately reflects the terms you agreed on. Keep a copy of your agreement so you can ensure you follow the parameters and have proof of the contract. Ask the dealer about any documentation or identification they need before coming to sign the deal so you can arrive prepared.

Tips for Negotiating a Car Lease

Negotiating your lease requires preparation and skill, but it’s worth it to get more favorable lease terms. Use these tips to negotiate your next auto lease:

Evaluate Your Needs

Before you negotiate a lease agreement, decide which factors and terms you actually need to get the most from your agreement. For example, if you drive roughly 10,000 miles per year and your lease has a maximum mileage of 12,000 miles, you might not need to push for a different mileage limit.

If you’re hoping to negotiate a lower monthly payment, do some research to figure out the total cost of owning the car (including things like gas and insurance) to back up your argument for a lower monthly rate.

Practice Negotiation Strategies

Negotiating your lease can take time and patience, but if you know how to negotiate effectively, you can improve your results and reach an agreement that benefits you and the lender. Speak confidently and use an assertive attitude to show the representative that you have done your research and have a good reason for negotiating.

You can also bring notes and data to make your argument more compelling. If you received multiple loan quotes, make sure to bring those offers as leverage to improve your chances of getting the deal you want.

Understand What Can’t Be Changed

While you can negotiate many aspects of the lease, some factors can’t be changed. Before you speak with the lender, it’s important to understand what aspects of a lease can’t be changed. Otherwise, you may find that your negotiation is unproductive. Typically, the following factors can’t be changed in a lease contract:

  • Acquisition fees
  • Residual value
  • Registration fees
  • Disposition fees

Make Sure You’re Getting a Good Deal

The cost of a car always includes more than just the monthly payments, and a lease is no different. Make sure that you calculate and compare the total costs, including the down payment, taxes, fees, and interest rates, to determine whether you’re getting a good deal.

You can figure out the total cost of your lease by multiplying the monthly payment by one less than the number of months in the lease term and adding the total down payment and fees. You can do this calculation for each lease offer to determine the best value and ensure you don’t pay more than the car is worth

Source: www.caranddriver.com