Leasing a car can be a great option for many drivers, especially if you have your heart set on a new model. Car leases typically have lower monthly payments than auto loans, and you can drive a new car every few years.
Comparing and exploring specials and offers from various dealerships is another valuable step in helping you negotiate a reliable car lease, ensuring you get the best possible lease for your needs.
While leasing a new car instead of buying one typically results in lower monthly payments, you can get even better results with a little preparation and negotiation. It all starts with understanding how leasing works, learning what can be negotiated, and working out the best deal possible, not just the lowest monthly payment.
Knowing how to negotiate a car lease can be a useful skill, especially if you understand some terms of the lease. This isn’t always the case with leasing deals, but you can follow this step-by-step approach to negotiating a car lease.
Key takeaways
Taking the time to understand the language of car leasing ensures confidence in negotiating for the best.
Search local deals in your area to find available discounts.
When signing a car lease, you cannot negotiate the acquisition fee, disposition fee, or residual value.
How To Negotiate a Car Lease?
Learning how to negotiate a car lease is a lot like learning how to negotiate anything else. You should prepare in advance by researching how car leasing works and learning the terms commonly used during the process. Once you’ve done your research, you can use that information to help negotiate the best lease you can get.
Learning how to negotiate a car lease isn’t necessarily difficult. But if you haven’t leased a vehicle before, you may not know all of the language used during the leasing process or what parts of your lease are up for discussion when you arrive at the dealership.
We’ll walk you through some of our top tips on how to negotiate a car lease, to help you leave the dealership feeling like you’ve made an informed decision.
1. Learn the Language of Lease agreement
It’s easy to feel overwhelmed with the language of lease agreements, especially if you don’t work in the automotive industry. However, you can get a slight advantage if you learn the lingo dealers use before you sit down to sign a lease. Below are some common leasing-related terms used by dealers.
Acquisition fee
The acquisition fee, which is sometimes also known as the assignment fee, or even the origination fee, is charged by the dealer to create the lease. This rate can range from $396 to $896, according to Edmunds.
If you don’t have the cash to pay the acquisition fees upfront when you start the lease, you can include it in your monthly lease payments.
Buyout price/ Purchase price
A lease purchase typically involves the purchase of a leased car at the end of the lease or, in some cases, before the scheduled end date of the lease. The purchase price is the amount the dealer would charge if you choose to take this step.
Reduction of capital costs
Capital cost reductions, or capital cost reductions, are down payments that reduce the amount you finance. This could include trade-in credits, incentives, rebate amounts, and even making a larger down payment.
Disposition fee
Disposal fees cover the costs associated with cleaning the vehicle and getting it in tip-top condition for another person to purchase after you return it.
Gross Capitalized Cost
The sales price of the vehicle, also known as market value, is the gross capitalized cost.
Residual value
The residual value is a projection of what the vehicle will be worth at the end of the lease. This figure is determined by depreciation and industry data.
2. Research prices and deals
Before heading to the dealership, it’s good to research any lease deals that may be available for the models you’re interested in. Look for manufacturer incentives and advertised special offers as a starting point for your negotiations.
Be sure to check the typical selling price of the cars you want. Even if you are not buying a new car, you can negotiate the price of it anyway. The lower you negotiate the price, the less depreciation you will have to pay over the life of the lease if all other terms remain the same. That can also mean a lower monthly lease payment.
3. Compare Lease Deals
If you want to negotiate a lease, it’s worth getting quotes from a few different dealers 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 higher mileage limit, they may be more willing to match it to win your business. Certain dealers or manufacturers may also offer special offers, such as lease incentives, discounted payments, and reduced interest rates.
4. Know What You Can’t Negotiate
While there are many things in leasing a new vehicle that you can negotiate, there are some things you can’t. Don’t waste time trying to haggle over these terms.
The residual value of a car is usually set by the leasing company, based on an independent assessment of the car’s expected value at the end of the lease. Distributors usually do not change regarding this number. If a seller says yes, they’re probably just moving other numbers around in the deal to make it look like yes.
Taxes and certain mandatory fees, such as registration, are simply passed through the dealership and cannot be negotiated. Disposal fees and purchase option fees are usually built into the lease contract and kept there, so dealers can use them at the end of your lease to try to get you to lease another vehicle.
5. Start the negotiations
Once you narrow down your list, schedule a visit to the dealership. Test drive the vehicles you are considering and begin negotiations. Try negotiating the following items.
Buyout price
Do you plan to purchase the car at the end of the lease? If so, the dealer may be willing to give you a deal on the purchase price.
Negotiating the purchase price upfront is particularly important because it is usually not possible to negotiate this expense after the lease is up.
Gross capitalized cost
Dealers often use a low monthly payment as a sales pitch to attract customers. However, it would help if you always tried to negotiate the sales price of the vehicle, which is also its gross capitalized cost. By negotiating, you may be able to get an affordable monthly payment without having to resort to extending the lease term.
To get a clear idea of the vehicle’s value, check sources like Kelley Blue Book and Edmunds for current cost averages.
Allowable Mileage
Most leases limit the number of miles you can drive, often between 10,000 and 12,000 miles per year. And if you exceed this annual limit, you will have to pay a fine. Don’t be fooled into accepting a low mileage allowance if you drive a lot.
Instead, ask for a higher allowance at a discounted rate when you start the lease to save money when you trade in the vehicle. When negotiating your mileage allowance, it’s important to know how many miles per year you typically drive.
Money factor
The money factor acts as the interest rate you pay to lease the vehicle. If you have very good to excellent credit (usually 740 or higher), you should have no problem getting the lowest interest rate the dealership offers. If you have poor credit then learn how to lease a car with a bad credit score.
6. Sign a Deal
Once you have completed the negotiations and are satisfied with the outcome, the final step is to sign the agreement and obtain the vehicle. Be sure to read the new agreement carefully and complete the necessary paperwork.
Make sure the document accurately reflects the agreed terms. Keep a copy of your agreement to ensure you follow the parameters and have proof of the contract. Ask the dealer about any paperwork or identification they need before you come to sign the deal so you can arrive prepared.
Tips to Properly Negotiate a Car Lease
When negotiating a car lease, it helps to be well-informed and well-prepared. Here are some tips that can help you with your next car lease negotiation:
Know all possible leasing knowledge
Doing your research has the potential to really pay off in the car lease negotiation process. As you learned above, knowing the fair market value of the car you’re considering could help you when negotiating the maximum cost.
It’s also helpful to research what other dealerships might offer for a similar vehicle, as well as what the overall picture of incentives and offers is like. Getting quotes from multiple dealers can give you a little extra leverage in negotiations.
Focus on the cap cost to reduce monthly payments
Some clients make the mistake of obsessing over the monthly payment amount, which may be reduced in ways that may not be in their best interests. Increasing the length of your lease term could reduce your monthly payments, but could cause you to pay more in the long run.
If you have a trade-in vehicle, this could give you some leverage to lower the cost of the cap and have a significant impact on the size of your monthly payments. Avoid these car leasing mistakes before leasing a vehicle.
Use time and patience for benefits
Appearing to be in a hurry to close the deal can give the dealer an advantage in negotiations. It usually helps to be patient and take your time, especially if you’re near the end of a sales month or quarter. This is when distributors traditionally have the most pressure to meet quotas, so it can be a good time to buy.
Be courteous and professional
The saying goes that with honey you catch more flies and this can also apply here. People tend to be more helpful to someone they like. A kind word and a calm attitude can go a long way in a negotiation.
Carefully Review Your Lease Agreement
Before you sign your lease, it’s helpful to read it carefully and make sure everything looks correct based on the terms you negotiated with the dealer. If you find anything you have questions or concerns about, it is best to have the dealer clarify them before agreeing.
People Also Ask
Can you negotiate a car lease?
Can car leases be negotiated? Yes, you can negotiate a car lease. You can negotiate the down payment, rental charge, and acquisition fees. Negotiating mileage on lease contracts is another area you can negotiate, among other areas open to negotiation.
How do you negotiate a car lease?
How you negotiate a car lease is up to you, but the main thing is to have a conversation and ask if the finance company can offer better terms for the lease. Understanding the leasing process can help you negotiate the lease terms that are right for you.
Can the price of a leased vehicle be negotiated?
Dealers often use a low monthly payment as a sales pitch to attract customers. However, you should always try to negotiate the sales price of the vehicle, which is also its gross capitalized cost. By negotiating, you may be able to get an affordable monthly payment without having to resort to extending the lease term.
Can I negotiate the purchase price of the leased car at the end of the term?
Yes, you may have the option to negotiate the purchase price if you are interested in purchasing the car at the end of the lease.
How do lease negotiations affect my credit score?
A higher credit score can result in lower interest rates and more favorable lease terms, making it easier to negotiate.
What happens if I go over the mileage limit on my lease?
Exceeding the mileage limit usually results in additional charges. It is essential to accurately estimate your annual mileage and discuss options with your dealer if you expect to exceed the limit.
Bottom Line
It’s possible to get a good deal on a car lease, but you’ll want to do a little legwork before visiting the dealership. Learning how to negotiate a car lease can be a potentially valuable skill that will help you get a better deal and save money the next time you lease a car.
By understanding the basics of car leasing and the costs associated with a lease, you will know how to speak to the dealer knowledgeably. You will also know what costs can typically be negotiated and what cannot.