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How to negotiate a car lease Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make smarter financial decisions by offering interactive financial calculators and tools, publishing original and objective content, by enabling you to conduct your own research and compare data for free - so that you can make sound financial decisions. Bankrate has partnerships with issuers, including but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this site come from companies that pay us. This compensation can affect the way and when products are featured on this site, including for instance, the order in which they appear in the listing categories in the event that they are not permitted by law for our mortgage home equity, mortgage and other products for home loans. But this compensation does affect the information we provide, or the reviews you read on this site. We do not cover the universe of companies or financial offerings that could be available to you.



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5 min read published August 9, 2022
Written by Allison Martin Written by

Allison Martin's work started over 10 years ago as a digital media strategist. She's been published in several leading financial publications, including The Wall Street Journal, MSN Money, MoneyTalksNews , Investopedia, Experian and Credit.com.







The edit was done by Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate from late 2021. They are dedicated to helping readers gain the confidence to take control of their finances with precise, well-studied information that break down complex subjects into digestible chunks.









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Are you considering a vehicle lease to drive around with style at a fraction of what you'd pay for a new vehicle? Learning about the process of leasing cars as well as getting familiar with the business terminology, as well as the ins and outs of lease agreements, is essential to landing a good deal. Looking around and examining the deals and specials offered by various dealers is a good way to help you negotiate a car lease with confidence, ensuring that you get the best possible lease agreement to meet your needs. When you walk into an auto dealership to purchase a new car, the car salesperson expects you to make an offer lower than the price they are asking for. It's not usually the case for lease deals, but there is a step-by-step approach to negotiate a car lease. 1. Learn the jargon It is easy to become overwhelmed by the , especially if you don't work in the automotive sector. But, you can give yourself a slight advantage by learning the terms used by dealers prior to when you sit down for signing a lease agreement. Here are some common lease-related terms that dealers use. Acquisition fee The acquisition fee, which is sometimes called the assignment fee or the origination fee is a charge imposed by the dealer to sign the lease. The amount of this fee can vary from , in accordance with Edmunds. If you don't have enough funds to pay for the initial acquisition costs when you sign the lease contract the fee can be rolled into your monthly lease payments. Price for buyout A lease buyout generally involves purchasing a leased vehicle at the end of the lease or in some cases prior to the scheduled end date. The purchase price is the amount that the dealer will charge you if you opt to do this. Cap cost reduction Cap cost reduction -- or capital cost reduction are any up-front payments that lower the amount you can finance. This can include trade-in credit or incentives, rebates, or even a bigger down payment. Disposition fees Disposition fees are the expenses associated with cleaning and preparing the vehicle to keep it in good condition to be sold to someone else after you return it. Gross capitalized cost The car's cost of sale, also referred to in the form of the market price is the cost that has been capitalized gross. "This may be a fancy word for the cost of the vehicle , including any other charges such as balances, taxes, and other charges," says David Undercoffler who is the editor-in-chief at Autolist. Residual value value is a projection of what the car is worth at the expiration of the lease. The figure is determined through depreciation and data from the industry. "With the residual, the seller is estimating the value of the vehicle worth when you turn it over," says Mike Quincy, auto writer and tester for Consumer Reports. "It's set at the beginning of the lease, and then used in calculating your monthly payment." 2. Research deals A quick Google search of "special lease deals" will not get you the best deal. Take your search a step further by making a list of all the deals you come across and consider broadening your search to areas outside of your area. Once you have an inventory of lease deals that you like on the top brands and models, make sure to call every dealership to verify the particulars. It is also advisable to ask about any other deals which aren't listed online. 3. Start the negotiations Once you pare down your list, plan an appointment with the dealer. Try out the vehicles you are considering and start the discussions. Some of the things the dealer could be willing to discuss include: Buyout price Are you planning to buy out take the lease out at the end of the lease? If so, the dealership might be willing to offer you an arrangement on the buyout price. "This is a good cost to negotiate before the start of the lease if you think there's a decent chance you'll decide to purchase the vehicle at the end period," says Undercoffler. Negotiating the buyout price upfront is crucial, because typically it's impossible to negotiate this cost after the lease is over, according to Undercoffler. Disposition fee You may be able to get a break on the disposal fee when you don't plan to turn the vehicle in or trade it in to a new lease after the lease contract expires. Be sure to negotiate this in the beginning, rather than trying to work around it at the end period. Gross capitalized cost is often the reason that dealerships will use the low monthly payments as a selling point to attract customers. However, you must attempt to negotiate the car's selling price that is also the gross capitalized cost. Through negotiation, you could be able to secure an affordable monthly installment without having to resort to prolonging the lease. "The capitalized gross cost will affect the monthly payment and also the final buyout value of the vehicle. The price is completely negotiable," says Nathan McAlpine who is the proprietor of CarMate, an auto broker business. However, in certain situations, such as when the dealer offers a specific monthly lease special it could be more difficult to bargain. In such cases the lease terms are typically pre-determined, according to Undercoffler. The mileage allowance of most leases limit the number of miles you can drive -- often to 10,000 to 12,000 miles annually. If you go over the annual limit it will result in a penalty to pay. Don't be tricked into accepting an allowance for mileage that is low if you travel a lot. Instead, you should request a larger allowance at a discounted rate when initiating the lease, in order to save yourself cash when you hand the vehicle in. "If you're certain you'll be driving more than the allowance for mileage and you're not sure, it's a good idea to negotiate a greater limit on mileage for a one-time fee, or no fee whatsoever, as opposed to paying the cost per mile when the lease ends," says Undercoffler. "Just know that if you bargain for a higher cap on mileage that it will reduce the value of the vehicle as well as the amount of buyout, as the vehicle will theoretically have more miles on it." If you're negotiating your mileage allowance, it's important to be aware of the number of miles per year you typically take. "If you pay for extra miles in advance but you can't claim the money back if you don't take advantage of the miles," says Quincy. Money factor The cash factor determines the rate of interest you pay to lease the vehicle. If you have very good credit, which is generally 740 or moreit shouldn't be a problem securing the lowest interest rate that the dealership can offer. 4. Close the deal It is important to review the entire lease agreement prior to sealing the deal. Lease agreements typically contain the following details the down payment required the amount of down payment, if there is one. The price of the lease is also known as the money factor or rent charge. Value of the vehicle at the start and expiration in the term. The annual mileage limit. A comprehensive fee schedule, which includes the cost in wear and tear and excess damage and other charges you could incur at the end of the lease. The cost of ending the lease in advance. What isn't negotiated? While you may negotiate various fees, there are some limitations. You won't be able to negotiate the following: Acquisition fees Dealerships typically do not waive the administrative fee however, they can add it to the lease payment should you need to. Residual value: This number is also non-negotiable as it is a way to account for depreciation as well as information from the industry. Plus, lowering the value of residuals too far could cause the dealer to lose money if you decide to purchase the car instead of turning it in. The bottom line is that it's possible to negotiate a favorable bargain on a lease for a car however you must do your homework prior to visiting the dealership. It's not only crucial to understand the terminology dealerships use, but you should also examine offers from various dealerships, learn what's negotiable and be sure to read the fine print on the lease agreement before sealing the agreement. Learn more


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Written by

Allison Martin's career began more than 10 years prior to that as a digital content strategist. She's been published in numerous prestigious financial media outlets including The Wall Street Journal, MSN Money, MoneyTalksNews , Investopedia, Experian and Credit.com.



Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain confidence to manage their finances by providing precise, well-studied information that breaks down complicated topics into digestible chunks.






Auto loans editor




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