Just like when it comes to financing a vehicle with an auto loan, you can negotiate certain aspects on a car lease. The trick is to know what you can and can't negotiate, and to follow some good negotiation tips.
What You Can, and Can’t, Negotiate on a Car Lease
When you finance a vehicle, there’s more to negotiate since you’re buying a car. With leasing, the leasing company sets the terms ahead of time and it’s impossible to change them. But, there are three things you can certainly negotiate if you plan on leasing:
- Capitalized cost – The amount being financed with a lease, which includes the price of the vehicle and any add-ons, fees, or taxes not paid in cash. Of those charges, you can negotiate the price of the car and any add-ons.
- Trade-in amount – If you have a trade-in, you can negotiate what the dealer offers for it and apply some or all of the equity toward a capitalized cost reduction.
- Documentation fee – You can negotiate a doc fee if the dealership has one. Doc fees cover the cost for processing the sales and registration paperwork.
As for what you can’t negotiate, besides taxes and registration fees, there are six factors that are set in stone:
- Money factor – In leasing terms, this is similar to an interest rate.
- Buyout price – If you want to buy the vehicle at the end of the lease term, you usually have to wait until the lease is finished to do this.
- Mileage cap and charges – You can’t negotiate additional lease mileage charge, although it’s cheaper to add miles at the beginning of a lease rather than pay for excess miles at the end.
- Residual value – Estimated value at the end of the lease term, which is set by the lessor.
- Acquisition fee – Also called a bank or administration fee, this is a fee charged to arrange the lease.
- Disposition fee – A fee charged by the leasing company that covers the cost of cleaning and selling the car after a lease. Note that if you intend on leasing again, the lessor may waive this fee.
Regardless of if you plan on leasing or buying a vehicle, you can use negotiation strategies that can help make the overall cost cheaper. To get the best deal on either a lease or loan, follow these five tips:
- Research numbers – Know the average price of the car you’re interested in, and the average money factor or interest rate for your credit score range. This way, you have an idea of whether the dealer or lessor is charging too much.
- Be careful about what you say – What you say is important, too. The best way to approach leasing a vehicle is by saying something along the lines of “I’m ready to lease a car today if we can agree on a price.” Don’t be timid, either.
- Start low – The best way to negotiate a vehicle’s price is to start low and work your way up.
- Don’t stray from your word – Don’t fall for any extras you don’t need in a car, or allow yourself to be talked into a more expensive model that's out of your price range.
- Nothing is official until you sign – If you can’t come up with an agreement, it’s okay to walk away from the deal. Nothing is official until you sign a contract.
The Bottom Line
You may be limited to what you can negotiate, but it doesn’t hurt to use these negotiating tips and try for a more affordable lease. Leasing can be a great alternative to car buying if you’re looking to drive the latest and safest models, but not everyone can qualify, as leases are generally reserved for those with good credit scores.
If you’re not sure about leasing because of your bad credit, you may want to consider auto financing, and The Car Connection wants to help you. We work with dealerships all across the country that are ready to help credit-challenged car buyers.
We want to match you with a dealer near you that can help you get back on the road. Get started right now by submitting our easy auto loan request form.