Many personal finance blogs will tell you that renting a car is a bad decision, but that doesn’t mean it will never make sense to you.
Maybe you like the idea of not having to worry about rising repair costs. Maybe you don’t want to bother selling a used car down the road. Heck, maybe you like the idea of driving a shiny new car every few years.
The whole point of managing your money wisely is to allow you to live the lifestyle you want. If you’re willing to cut your budget in other areas for auto leasing, that’s your prerogative.
That said, many people have found themselves in financial difficulty by negotiating a car lease without doing their research first.
11 tips for negotiating a car lease
- Know your numbers
- Know what you want
- Get quotes in advance
- Test the dealership (and the seller)
- Check dealer inventory
- Buy when you have a good day
- Bring backup
- Take out your phone
- Look for the date of manufacture
- Negotiate a car leasing like a purchase
- Be ready to go out
You may guess that it is more difficult today than before to negotiate a car lease. After all, inflation is at an all-time high and the market is still plagued by vehicle shortages across the country, so supply can’t keep up with demand.
But in fact, despite the continuing problems presented by the pandemic and current economic conditions, today’s world is ideal for negotiating a car lease. You can use the internet to arm yourself with knowledge, and you can even use real-time apps to take smart action during lease negotiations.
1. Know your numbers
A lease has more components than monthly payments, so be sure to sit down in advance and figure out how much you are able (and willing) to spend on:
- The deposit
- The total cost of the car (called the “ceiling cost”)
- The buyout or option price (i.e. what you have to pay at the end of the lease if you choose to buy the car)
It is also important to understand how the mileage limit works. A mileage limit on a lease limits you to a set number of miles you can drive each year (usually 10,000, 12,000, or 15,000). The higher the mileage limit, the higher your monthly payment will be.
What if you go over your mileage limit? You will be charged a fee per thousand at the end of the lease, so make sure you know what these costs are.
2. Know what you want
Showing up at a dealership without thinking about a particular car is like showing up with a sign around your neck that says, “I’m open to the most expensive option you can sell me!”
Do your research ahead of time to find out which brands and models best suit your needs, and also think seriously about which options you can’t live without and which ones you can live without.
Showing up knowing what you’re doing prevents you from being pushed into more cars than necessary – and it also gives a solid first impression that you’re on top of things and won’t be easily persuaded.
3. Get quotes in advance
Try contacting a dealership’s internet sales department for a quote before you go to the field.
It’s pretty hard for a salesperson to sell you more when you already have a quote in hand from their dealership.
4. Test the dealership (and seller)
Most of us check online reviews before trying a new restaurant. Why shouldn’t you do the same when you’re about to make a much larger purchase?
For example, Edmunds.com offers a dealer ratings and reviews page where you can read the experiences of other customers at dealerships in the area.
5. Check Dealership Inventory
If your ideal car is in storage (read: sitting on the lot taking up valuable space), you have an immediate advantage in negotiating a car lease.
If a salesperson needs to get you a car somewhere else, they can play the “I’m doing you a favor by taking a detour” card.
But if you offer to take a car away from them, you can play the card “I am doing you a favor by helping you remove this from your field”.
You can check local dealer inventory here.
6. Buy when you’re having a good day
The old adage “Never shop on an empty stomach” doesn’t just apply to grocery stores.
If you go to a dealership when you are not feeling well (hungry, sick, tired, etc.), you will be less lucid and easier to push into a bad deal because you just want to be done with it.
Leave when you feel rested and ready to handle the stress of negotiations.
Also, try to start buying your next car before your current one breaks down completely, so you don’t get stressed out about making a quick mindless purchase.
If you have more wiggle room in your schedule, wait until the holiday sales, if possible. Memorial Day and Labor Day in particular are known for their deep dealer discounts.
But if you can’t wait for the holiday weekends that end the summer, try going at the end of the month, the end of the term, or the end of the year. Sellers are desperately trying to sell and lease vehicles to meet their quotas – and will therefore already be more open to transporting and selling.
7. Bring a Backup
Even if you feel pretty confident in your negotiation skills, it always helps to have someone to keep you on track.
Whether it’s a friend, family member, or colleague who looks intimidating, bring along someone who can point out the pitfalls of a potential deal, remind you of your budget initial and prevent you from falling into the trap of trickery.
8. Keep your phone out
Many apps can help you negotiate a car lease in real time, even during the conversation.
TrueCar shows you what other customers have paid for similar cars at a dealership.
The Cars app allows you to compare in-stock vehicles at multiple local dealerships side-by-side and also helps you calculate loan terms based on current negotiations or your budget.
Not only do these apps help you be armed and ready, but they send a clear signal to the salesperson that you are not someone they can take for a ride. Unless it’s a test drive.
9. Find the date of manufacture
Chances are there’s one key piece of information you probably forgot when browsing cars at the dealership, and it could give you some extra leverage: the date of manufacture.
We all look at a car’s window sticker, which tells us things like price and fuel mileage, but don’t forget to check the manufacturer’s sticker (usually found on the driver’s side door of a car). ‘a vehicle). In the upper left corner of the sticker you will see a date and month, which tells you when the car rolled off the production line.
The farther in the past that date is, the longer the car has been in the lot – and the more ownership costs the dealer has had to pay. Meaning: They are ready to get rid of this car.
10. Negotiate a car lease like a purchase
One of the easiest ways to be okay with spending more than you want is to just focus on making a monthly lease payment. This gives the dealer leverage to offer you alternative lease terms. (See this diagram of the “cash flow shell game” to see how it works.)
To get the best deal, negotiate the ceiling price first, as if you were planning to buy the car outright.
In fact, don’t even talk about leasing until you and the dealer have agreed on a price. Once that’s settled, then you can offer financing options (which include leasing).
11. Be ready to go out
If you don’t seem to be getting anywhere with a salesperson, don’t be afraid to just walk away.
One of two things will happen: the salesperson will panic and stop you halfway to try to close the deal, or they will let you go, in which case you may find a dealer who is ready to work with you.
Contributor Timothy Moore is a writer and editor in Cincinnati, focusing on banking, loan insurance and automotive topics for The Penny Hoarder. Kelly Gurnett is a former contributor to The Penny Hoarder.