Leasing may sound complicated, but really it’s just another form of financing. Once you understand the basics, you should be able to find the best current lease deals and negotiate a low cost lease with no problem. Take a few minutes to read through the following tips, then request a free leasing price quote to discover the current car lease deals available in your area.
Step 1: Research the Value
In order to get the best deal on a new car lease it’s important to know how much the vehicle is worth new, as well as its predicted value at the end of the lease term.
- Find out what other car buyers are paying for the same vehicle in your area.
- Learn the MSRP and factory invoice price of the vehicle.
- Research the vehicle’s residual value. This is the percentage the vehicle is expected to depreciate.
- If you plan to trade-in your old vehicle, research its current market value.
It’s a good idea to print out all of this information to use as a reference during the negotiating process.
Step 2: Negotiate the Purchase Price
The price of a new vehicle should be the same whether you are buying or leasing. The lower you negotiate this price, the better lease deal you’ll have.
- Start an offer that is close to the factory invoice price. This is the amount the dealer paid for the vehicle.
- Negotiate with the dealer until you agree on a price close to what other buyers are paying.
- Aim for a price less than MSRP or sticker price.
- DO NOT agree to a price that is more than the MSRP.
Step 3: Negotiate the Residual Value
Once you have determined how much the vehicle is worth new, you’ll need to agree on a residual value. The dealer will subtract the residual value from the purchase price to determine the overall cost of your lease.
- Compare the residual value provided by the dealer to the values you researched.
- If the residual value is lower than the averages you found request the dealer increase.
- See if the dealer is willing to negotiate further.
If a dealership is having trouble moving a specific model they may be willing to inflate the residual value.
Step 4: Review the Interest Rate
The interest rate is sometimes referred to as the money factor. Beware, they are two different things. The money factor is a number expressed in very small decimal. The interest rate is a percentage. You can easily use one to calculate the other.
- Ask the dealer for the money factor.
- Multiply the money factor by 2400 to calculate the estimated APR.
- Divide the interest rate by 2400 to calculate the estimated money factor.
- Make sure the APR is equal or less than an auto loan.
Compare the interest rate offered by the dealer to multiple private lenders, you may find a better deal.
Step 5: Review the Lease Contract
Before you sign the contract, sit down and review it closely. Feel free to ask questions and if something doesn’t seem right, request a change. Once satisfied sign and drive away with the best lease deal possible!
