Car leasing strategies
Figuring out how to negotiate a car lease requires learning from others who’ve gone through the process before. Use the following car leasing strategies to spot car lease fees to avoid and walk away with a lease deal you can be proud of.
1. Define your ideal lease
Life is often divided into three categories: what you want, need, and get. However, the best way to tackle your next lease is to brainstorm what you want and can afford. More importantly, it’s a great time to check your finances and plan for the future.
When you define your ideal lease, don’t think of it as leasing a Mercedes-Benz or Audi for $100 monthly. Instead, put numbers to what you can afford, from monthly payments and down payments to money factors and additional leasing fees. You can check your credit score with a free annual report to understand what money factor you’re eligible for.
You should also consider more than one make and model. If you want to lease a truck, consider the Ram 1500 vs. the Chevrolet Silverado. Broadening your search can help you find better lease deals to fit your needs. If you know what new models are coming out, you can also find lease deals on older models. Just avoid ending your lease in the last few months of the year.
2. Brush up on lease terms
If you don’t know the rules of the game, it’s near impossible to stay competitive. Learn the lease terms that define lease agreements so you can be sure you’re getting the best deal possible. That means looking for a high residual value to finance less over the life of your lease.
You should also look for a low money factor. Below 0.00333 is a superb money factor, but anything over 0.0075 translates to an interest rate of over 18%. Capitalized costs, disposition fees, and option discount adjustments are terms you should know before you set foot on a dealership lot.
3. Control communication
One of the tricks car salesmen use keeps you waiting around the dealership until you’re tired of staring at the same four walls. Avoid the humdrum of wasting your time as you sweat it out by communicating via email instead. This way, you can have written documentation of any negotiations. You can also ask the salesperson to deliver your car so you’re not caught in the finance office paying for add-ons and extended warranty coverage you may not want.
4. Negotiate the smart way
The first and often unspoken rule of negotiating is understanding where you have grounds to negotiate and, more importantly, where you don’t. You can negotiate the following terms in a lease agreement:
- Money factor
- Capitalized costs
- Mileage limits
- Purchase option fee
- Disposition fee
It’s a common rule of thumb to adhere to the 1% rule. This rule dictates finding a monthly lease payment equivalent to 1% of the car’s purchase price. For example, a $60,000 car would be a steal if you leased it for $600 monthly.
You cannot negotiate acquisition fees, residual value, registration costs, or sales tax. However, if you shop around for lease deals, you can often use negotiated deals to prompt other dealerships and leasing companies to match or beat them. Some manufacturers offer leasing specials that are already negotiated, so be sure to read the fine print before you start wheeling and dealing.
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