When you finally decide to get a new car, your first instinct may be to buy. But have you considered that leasing might be a better option?
There are a lot of benefits to buying a car, but for many people, the perks of leasing a car will far outweigh the benefits of buying a car. So why is it sometimes better to lease a car than to buy?
There is a misconception when it comes to leasing that you do not have as much negotiating power. But this could not be farther from the truth. When you lease a car, you actually have much more to negotiate on than when you buy a car. So what exactly can you negotiate on your car lease?
The capitalized cost (or “cap Cost”) is the agreed upon value of the car. In other words, it is the sticker price of the car. Your car lease payments will all be based off of this price, so it’s important to negotiate this number as low as you can. Be sure to go to Kelley Blue Book and Edmunds to get a good sense of what a fair value is for your car.
The money factor is similar to the interest on a loan. It is essentially the cost of leasing the car. Money factors are expressed as very small numbers (such as .003), but you can multiply this number by 2400 to get an approximate percentage that makes sense (.003 x 2400 = 7.2%).
Your ability to negotiate this will vary from dealer to dealer. Your money factor is determined mostly by your credit score, so the factor that you are offered will depend on which bracket your credit score is in. Some dealers will claim this is non-negotiable, while some dealers may budge. It is worthwhile to try to negotiate this rate as low as possible.
You can usually negotiate the down payment required on your lease. And if your credit score is good enough, you may be able to put zero money down.
When you buy a car, you want to put down as much money as you can, as you will not have to pay interest on that money and it will help ensure that your loan doesn’t become underwater. But leasing is different. If you put a down payment on a car lease and something happens to it, that money is simply gone. Additionally, one of the main perks of leasing is the low upfront costs. If you have a large down payment, this defeats this perk. You should always try to negotiate this and roll over any down payment requirements into monthly payments.
Depending on how much you drive, the mileage allowance may be a huge hindrance for you. All leased cars have annual mileage allowances, typically 10,000 or 12,000 miles per year. If you go over your allotted mileage, you could face a fee for every mile that exceeds your limit. So you want to be sure to negotiate this term in your car lease agreement.
Consider how long you want to have your leased car. This will vary from person to person – some people love getting a new car as soon as they are able to, while others like to stick with a car they are comfortable with for a longer period of time. You should be sure however that you never extend your lease beyond your warranty period. If something breaks while you are leasing the car but it is not covered under warranty, it will be your responsibility to fix it. And that can be a big hit in the wallet.
Leasing a car online may provide you the best chance to get a good deal. Instead of being limited to the dealerships that are nearest to you, you have a much larger market to look through. So here are our top tips to negotiate and lease a car online.
If this will be a trade-in, you will also need any trade documents, such as your current car’s title, registration, and/or loan release. Compile all of your documents and scan them onto your computer. Complete all of your applications and wait for your offers to come in.
In order to find the best car lease deals, you will need to do some research. There are tons of websites that specialize in online leases, like CarsDirect and TrueCar. But be sure you know what is a good value for the car lease you are interested in by using sites such as Kelley Blue Book and Edmunds to look up values.
If you are already leasing a car and are interested in purchasing it, you can find great lease purchase deals online as well. Purchasing your lease may be a good option if any of the following apply to you:
Whatever your reason is, lease buyouts can be a great way to save money and stay in the car you love. At Auto Approve, lease buyouts happen to be one of our specialties. We can help you secure financing and keep you in the car you love!
There’s a lot to think about when it comes to leasing a car. Be sure to weigh your options and decide what works best for you. No matter what you decide, be sure to do your research and negotiate as much as possible.
If a lease purchase makes sense for you, you can get started with Auto Approve today!