One of the more frustrating things about purchasing a car is all of the haggling you have to do. Leasing a car can be a much simpler process, but you may still want to do a little negotiating to find the best car lease deals out there.
You may not think of negotiating when leasing a car but it is wise to do. In order to get the best deal, understanding the lease terms will help you so you can negotiate: the lease terms, the cost of the car, and the interest rate.
Understanding the Terms of the Lease
The verbiage in car leases is different from a purchase agreement. Understanding specific terms and what they mean will help you know what you’re getting into. Because there are specific requirements that must be met to stay within the terms of your car lease, you need to fully understand what those are.
To avoid paying penalties, get to know what all the jargon in the lease agreement means. You could potentially pay more money if you go over the mileage amount per year, don’t maintain the car per the lease, try to get out of the lease, and other things. All of these potential penalties can add up to a big sum.
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Leasing a car is not financed in the same way as purchasing one. Instead, the money factor is the way the interest rate is determined. Be sure and ask for a clear number from the company you are leasing with.
Another term to know is the capitalized cost or cap cost. This is the price of the car with depreciation in mind and what you are actually paying for. Making sure you understand these terms will help you feel more comfortable.
Negotiating the Lease Terms
Once you have mastered the ins and outs of the lease, you will be more comfortable negotiating its terms. You can hash out the mileage per year, how long the lease is good for if there is a buyout agreement, and more.
Knowing the terms you want and where you have some wiggle room will help in the negotiation process. Don’t be afraid to negotiate to get to the terms you are comfortable with.
Negotiating the Cost of the Car
Even though you are leasing a car, you can still negotiate the total cost. Instead of looking at the monthly payments offered by the dealer, look at the overall cost of the car.
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See if you can negotiate the total price down, which in turn lowers your monthly payment. Doing research on the car you are wanting will help give you the knowledge and power to successfully negotiate a better price.
Negotiate the Price of Financing
When leasing a car, the interest rate is figured out a little differently than when purchasing a car. Talking with different banks about the interest rate they can offer on leasing a car is smart and allows you to shop around for the best deal.
When you go into a dealership with an interest rate from the bank, they may be more willing to give you an even better deal because they want you to finance through them. Having that power will help you be able to negotiate better.
Understanding What You Can’t Negotiate
While there are several aspects of leasing a car that allows for wiggle room, there are some things that are set in stone. Don’t bother trying to negotiate these things:
- Taxes – registration and taxes are set for cars. Don’t bother trying to get the dealership to remove them from the total.
- Mandatory fees – just as the name suggests, some fees are mandatory and dealers can’t remove them. Keep in mind there are some fees that aren’t mandatory, such as document fees and advertising fees. You should definitely try and get these removed.
- The residual cost of the car – this is based on an assessment done by a company on the value of the car. This number is given to the dealership, or company leasing the car and usually cannot budge.
Once you understand certain things can’t be negotiated, you can focus your efforts on the things that you can haggle over.
Knowing what you want before you go in to lease a car will help you save money in the long run. Start out by understanding the key terms used in the lease agreement so that you can negotiate the terms of the lease, the cost you are paying, and the price of financing.