You’ve read countless ratings and reviews, you’ve combed over the specs and compared gas mileages, you’ve picked out the perfect color and trim. Now, you’re finally ready to pull the trigger on your car lease. But are you prepared to negotiate your lease? Do you know the lingo? Do you know what is worth fighting for and what isn’t?
Don't sweat it – we’ve got you covered! Here’s everything you need to know about negotiating your car lease.
Getting the Best Rate When You Lease a Car
When you lease a car, you want to do your homework and thoroughly research the lease deals that are out there. Look around at different dealerships and compare the different offers. You can always use this information when negotiating to get more competitive deals.
Here are the top factors you want to negotiate in your lease.
Capitalized Cost
The capitalized cost, also called the “cap cost”, is the agreed upon value of the car. It is essentially the sale price. This is a great place to start negotiating. Getting a lower cap cost will greatly reduce your loan payments.
Check a few different websites to get a good idea of the car’s value. Sites like Kelley Blue Book and Consumer Reports are great places to start.
Money Factor
A money factor, or rent charge, is essentially the APR on the lease. Money factors are expressed as very small numbers (like .00275), so to make it easier to understand you can multiply the money factor by 2400 to give you an approximate APR (.00275 x 2400= 6.6%).
Some dealers will claim that the money factor is non-negotiable, but that doesn’t mean you should just say yes and accept the number they give you. Money factors are set by lending institutions and are not easily changed, but some dealerships will add on to the money factor for additional profit. You want to be diligent and make sure that it is in line with what prevailing market rates are. Before you even set foot in a dealership, research what the current money factor range is.
Lease Term
This isn’t really something that you have to “negotiate”, but it is something that you will have to decide. Leases usually range from 36-72 months, so you can decide how long you want to have this particular car. If you like to always have the newest car and technology, opting for a shorter lease is probably your best bet. If you are a creature of habit and prefer consistency, a longer lease term is probably preferable for you.
Mileage Allowance
Depending on how much you drive, this might be a huge deal for you. Leases will always put a cap on the amount of miles you can put on your car and charge you when you go beyond your limit. It will most likely be cheaper for you to negotiate a change in terms upfront and get a larger mileage amount than to pay the overage fees. Sometimes the fees of going over the mileage limit are so outrageous that it makes sense to consider auto lease purchase.
Which is Right for You: Lease vs. Buy (Car, Truck, or SUV)
The biggest difference when it comes to lease vs. buy–car, truck, or SUV–is ultimately who owns the car. When you lease a car, it is owned by the dealership and you are paying to use it (think of it as renting a car). When you buy a car, you own it outright. If buying a car involves financing, the car is owned by the lender and once you finish making payments the car is yours.
But what are some of the other differences when it comes to leasing vs. buying?
Payments
In general, lease payments will be lower than financing payments. This is because you are paying for the time you are using the car and not the total value of the car. When you lease a car, you are paying for the depreciation of the car in the time that you are using it.
Mileage
Leases almost always have mileage limits that you will be penalized if you go over. For example, if you go over 10,000 miles per year, you will be charged a certain amount per mile that you exceed. If you buy a car, there is no limit to your mileage.
Wear and Tear
Leases will have terms that specify the condition that the car must be returned in. If there is anything that they deem to be beyond normal wear and tear, they will penalize you financially. If you buy the car, you do not need to worry about this (it’s yours after all!)
Customization
If you lease a car, you will not be able to customize it in a way that you may want to. No aftermarket paint jobs or tinted windows–the car must be returned to the dealership in its original form. If you own the car, this is not something you need to worry about.
Maintenance
When you buy a car, you are responsible for all maintenance and repairs. If it is not covered under your warranty, the bill is your responsibility. When you lease a car, some maintenance and repairs will be covered under the lease agreement (this can include oil changes as well).
The Bottom Line
When it comes to leasing vs. buying a car, it is highly dependent on the individual and their driving habits. If you like the idea of trading your car in every few years and starting fresh, leasing might be a good option. If you intend to keep your car for the long haul, buying will make more sense. And if you change your mind and want to keep your leased vehicle, there’s always auto lease purchase.
Where To Find The Best Car Lease Deals
If leasing makes sense for your lifestyle, you are probably now wondering where you can find the best car lease deals.
There is no one stop shop for finding the best lease deal. You will need to do your homework and shop around. The area you live in as well as your credit score will affect what deals are available to you. Check out sites like CarFax and Kelley Blue Book to find the best deals in your area.
If you have a lease and you’ve gone over the terms (say you drove a few too many miles or you have quite a bit of wear and tear), you should consider an auto lease purchase. Auto Approve specializes in auto lease purchases, making it easy for you to finance your purchase.
And that’s what you should consider when you negotiate a car lease.
There are a lot of decisions you will have to make when you lease a car, from the length of the lease to your monthly budget allowance. But if you shop around and look for the best rates you can get a lease that’s right for you.
Want to purchase your current leased car? Auto Approve can help with that too!
