How to Negotiate a New Vehicle Lease

Leasing a vehicle can be an attractive alternative to purchasing the vehicle outright. Under a lease, you are paying to use the vehicle but are not taking ownership of the vehicle. As a result, the upfront costs are much lower for a lease, and you will have an ability to turn the vehicle in for a newer model after the lease is finished. Leasing a new vehicle can be complicated; the process will be much smoother if you do some research upfront and if you know what to expect.

Difficulty: Moderately Challenging

Instructions

1. Research the true market value of the vehicle you want to lease using Edmunds.com or Kelley Blue Book's website. Enter the year, make and model of the vehicle you are interested in as well as all of the features you want. Enter your zip code to determine what people in your area are paying for comparably equipped vehicles. Make sure you accurately enter the features and options you want, since these will have an impact on the true market value of the vehicle.

2. Talk with friends who have recently leased vehicles to determine what terms they accepted on their leases. Pay particular attention to the annual mileage limits your friends received as well as the cost per mile for miles in excess of the limit.

3. Visit numerous dealers to test drive the vehicle you are interested in. Do not be pressured into signing a lease that day; you should visit at least three dealerships before making any decisions. Be firm about the options you want since some dealers may try to up-sell you on a vehicle with features you do not want.

4. Call the dealers you have visited to negotiate the value of the vehicle you want to lease. If possible, negotiate with all of the dealers simultaneously to ensure you get the best deal. A lower value means lower lease payments for you---it is critical you negotiate a good value for the vehicle. Base your negotiations on the true market value research you have conducted; play the dealers off against one another to create negotiating leverage for yourself.

5. Visit the dealer that offers you the lowest vehicle value and finalize the terms of the lease. There are numerous terms to consider, including how much you will have to pay upfront (usually the first month's payment and a refundable security deposit); the length of the lease; any end-of-lease payments or fees; per-year mileage allowance and the per-mile charge for excess use; and the definition of excess wear and tear and any associated charges. If the dealer refuses to budge on any of the terms, consider walking from the deal and going back to one of the other dealers you spoke to.

Tips & Warnings

• Negotiate a refundable security deposit at the start of the lease. Some dealers may try to lump the security deposit into other, non-refundable fees you are required to pay at the start of the lease. Be sure you get the security deposit back at the end of the lease (assuming there is no significant damage to the vehicle). When negotiating the terms of the lease, it is best to keep all issues on the table for as long as possible. Even if there is a particular term you don't care about, you can trade a concession on that term for a concession on another term that is more important to you.

References

• The Guide to Leasing

Resources

• Auto Leasing Tips & Latest Rates
• Buy vs. Lease Calculator
• Edmunds
• Kelley Blue Book