Car leasing strategies and car leasing secrets dealers don’t want you to know
Before even beginning to think about leasing a car, it’s important to understand the fundamental trade off of interests that occurs when you’re dealing with a car dealer, and the subsequent car leasing strategies to ensure that you’re on the right side of this tradeoff. Think about it: you’re looking to get the lowest monthly payment at the expense of the dealer, and the dealer is looking to get the highest profit, at the expense of you. That’s why there are a lot of tricks up their sleeves and car leasing secrets to be aware of.
Make sure you negotiate
Here’s the deal: most people are well aware that a car purchase price is negotiable, they aren’t aware that lease price is negotiable as well. This is why some people will walk away from a dealership unaware that their “personal lease deal” was actually just the MSRP (Manufacturer Suggested Retail Price) of the car.
Another bit of advice is to focus on negotiating the full selling price of the car and steer clear of conversations focused on monthly payments. Monthly payments can be heavily distorted by downpayments and other fees while negotiating the selling price ensures that you’re talking about the entirety of the price of thevehicle altogether – it just keeps things more transparent. Trust us.
If it seems too good to be true, it probably is
Sometimes a dealer will hit you with an offer you cannot refuse. It is at this crucial point that you must refuse – or at least be a little skeptical. Sometimes the dealer will switch out the model you’re looking for something less expensive without letting you know. Sometimes he’ll lower the mileage limit you set for yourself to make the deal seem less expensive. Sometimes, he’ll even increase your lease term by a few months hoping you won’t read into your contract meticulously enough before signing (which, unfortunately, most people don’t). Keep in mind that the best auto lease deals are generally the ones that seem reasonable enough to be real.
Know how leasing works enough to know that dealers aren’t actually leasing cars
Most people aren’t aware that dealers aren’t ever leasing them a car. Dealers are deal facilitators not deal makers. Just to give a brief rundown – a dealership buys a bunch of cars from the manufacturer and stores them in a dealership. Then after you get approved by a leasing company and sign a leasing contract, the leasing company pays for the car in full. You then make your monthly payments to the leasing company, paying them back for the car in increments. So, as you can see, the dealer is actually just the middle-man here.
This is important to understand because there are certain parts of the lease deal that the middle-man can negotiate, and there are certain parts that they cannot. For example, if you want to negotiate selling price of a vehicle, then that is something that is within a dealer’s control. But other parts of a leasing contract (money factor, residual rate, bank fees, document fees, etc.) are completely out of the dealer’s hands.
Once you have a good understanding of this, it becomes much easier to focus on the parts of the lease you are more likely to get a discount on and disregard the parts that are a losing battle from the start.
Understand the difference between renting and leasing
They are, in fact, very different. Dealers will generally not explain to you why they’re different or the factors that make them different, but suffice it to say that you cannot return a lease whenever you want as you can with a rental, and you are contractually binded to making payments with a lease (more similarly to a loan).
Steer clear of heavy down payments
The main reason for this is that if your car gets stolen or totaled, your downpayment is completely gone whereas you’re not responsible for further monthly payments. It’s better to pay it in increments over the course of your lease term than potentially lose the money completely if the circumstances don’t play out in your favor.