If you are in the market for a car, you may have the option of leasing it instead of buying it. When you buy a car, you generally have the opportunity to negotiate the price of the vehicle, the monthly payment and the interest rate on the loan. Is there an opportunity to negotiate the terms of a lease?
Do You Have Good Credit?
Dealers and leasing companies tend to negotiate only with those who have a good credit score. This is because they know that they are likely to get paid on time, and they also know that you may be a repeat customer. Therefore, they may waive or reduce your down payment, lower the effective interest rate or take other steps to make it easier to get a deal done.
Does the Dealer Really Need to Move the Car?
If a dealer needs to get a certain make or model off of the lot, that dealer may be more amenable to doing a deal with you. This may include lowering the residual value, adding more to the value of any trade that you have or reducing your down payment. Again, the dealer’s willingness to do a deal will depend greatly on your credit score or other factors that show you can be trusted to pay your debt.
You Can Generally Negotiate Mile Limits
A lease will generally limit you to 10,000 to 15,000 miles per year before you have to pay a fee. If you don’t think that you need as many miles as the lease offers, you may be able to reduce your limit in exchange for a lower lease payment. If you think that you may drive more than the annual limit, you may be able to purchase additional miles. In some cases, it may be possible to negotiate the overage fee in lieu of purchasing additional miles.
Do You Need to Pay a Security Deposit?
When you rent an apartment, the landlord generally requires a security deposit. However, this may be waived if you have good credit or because the landlord wants to entice you to move in immediately. The same concept is true when you choose to lease a car. Most leasing companies will require those who have average credit or are otherwise a credit risk to pay a security deposit.
What Happens If You Don’t Want to Make a Down Payment?
When you buy a car, it is a good idea to make a down payment because you want to build equity as fast as possible. When you lease a car, you want to pay as little upfront as possible because you don’t build equity in the vehicle. Typically, those who want to avoid making a down payment will have that money rolled back into the loan, which results in a slightly higher payment each month. The upside to making a higher monthly payment is that you have thousands of dollars still in your bank account that can be invested or otherwise used as you see fit.
If you are looking to lease a car in the near future, it is important to know what parts of the deal are open for negotiation. Understanding where a dealer may be able to work with you could result in a less expensive lease deal. At the very least, it may allow you to walk out of the dealership without having to dip into your savings.