If you are interested in leasing a car, timing is everything. About 20% of new car sales are leases, so while it is not as popular as it used to be, it is still a great option for many people. Leasing allows people to have lower monthly payments, enjoy a new car every year, and have minimum maintenance worries during the life of their lease. But is there a good time to lease a car, and how can you time your lease in order to get the best deal possible?
Let’s talk about the best time of year to lease a new car.
When is the best month to lease a car?
In general you will find the best deal on a new car lease is right when a new car is released. That is because the residual value of the car will be the highest at this point. A car’s residual value is the expected value of the car at the end of the leasing period and its expected value will only increase as the months go on. Residual values that are listed in contracts are typically based off of the Automotive Lease Guide's Residual Percentage Guide. These numbers get updated every two months, and every two months they tend to tick lower in value.
Most new car models are released between July and October, so this is the time of year where you are most likely to find a great deal. But there are other times throughout the year where you may find great deals.
Holiday weekends are a great time to find deals on new car leases. Famously good deals days include:
Presidents’ Day Weekend
Memorial Day Weekend
Labor Day Weekend
Thanksgiving
Additionally you might score a good deal by choosing to wait until the end of the month to lease. Dealerships have monthly quotas that they are trying to meet, so if you wait until the end of the month they may cut you an exceptionally good deal to help meet their quota. This also applies to the end of a quarter or the end of the year.
How can I get the best deal on my leased car?
When looking to get the best deal on your new leased car there are a number of steps you can take to give yourself an edge.
Get your finances in top shape.
Whether you plan to buy a new car or lease a new car, having your finances in good order is the best way to ensure you get the best deal possible. At the top of this list is getting your credit score as high as possible. A good credit score is irreplaceable, so work to improve it before you look into leasing or financing.
Obtaining a copy of your credit report and looking for areas of improvement is the best way to do this. This will break down your credit score and allow you to see any missed payments, late payments, opened and closed accounts, credit limits, and any negative events (such as bankruptcy). You can dispute errors if you notice any, which can help you avoid serious problems in the future.
When you look at your credit report, see where you can improve. Can you work to make more timely payments? Are there areas where you can pay down your debt? Can you ask for any increased credit limits? All of these steps will improve your credit score and ultimately score you a better deal.
Negotiate fees on your lease.
Dealers love to add on fees to, well, everything. So doing your research ahead of time and knowing what fees are negotiable can save you a lot of money. You may be able to negotiate the following fees in your lease.
The mileage allowance fees
Disposition fees
Purchase options fees
You will most likely not be able to negotiate the acquisition fee, registration, or taxes. But if there are extra fees thrown at that look unfamiliar, you should always try to negotiate.
Understand the terms.
Car leasing has a lot of lingo that you should get to know beforehand. While it may not necessarily get you a better deal, it will help you avoid getting taken advantage of and settling into a bed deal. Here are some of the most important terms you need to know.
Acquisition Fee: Covers the expenses of arranging the loan, such as obtaining your credit report and verifying that you have insurance.
Adjusted Capitalized Cost: The amount that the lease payments are based on. It is the cost of the car minus any down payment, plus any fees.
Base Monthly Payment: Your lease payment will be based on the amount of depreciation that will occur over your lease period. Taxes and fees may be added onto this.
Capitalized Cost: The cost of the new car.
Disposition Fee: The cost of preparing the car for sale at the end of lease. This is a fee so that the car may be cleaned, serviced, and prepared for sale as a certified pre owned car.
Money Factor: The number that determines the interest you will pay on the lease (multiplying the money factor by 2400 will give you an approximate interest rate).
Residual Value: The leased car’s anticipated value at the end of the lease period.
Knowing these terms will help ensure you understand the deal that you are entering into. The more familiar and comfortable you are with these terms, the better you will feel when entering into a car lease.
Is it worth it to lease a car?
Deciding whether to lease or buy a car is a big decision. There are pros and cons to leasing and to buying, so you should take the time to consider each option.
The pros of leasing include:
Lower monthly payments
Lower down payment
New car every few years
Less maintenance and repair expenses
The pros of buying include:
Owning a car builds equity
No limits and restrictions on usage, such as mileage limits
You can sell your car at any time
Consider how you will use your car, what you will use your car for, and how much you can afford to spend on car payments every month. If you love your leased car at the end of the lease period you can buy out your leased car with a car lease buyout loan from Auto Approve.
That’s when you will have the best chance to get a great deal on a car lease.
If you are thinking about buying your leased car, Auto Approve can help! Contact Auto Approve today to get started!