Strategies for Negotiating
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"Leasing is a way to drive a nice car and make
amazingly low monthly payments. It is also a way for the
friendly folks at the local car store to take you for a long and
mysterious ride at the end of which you say good by to a whole
lot of money."
Michael Flinn -- How to Save Big Money When
You Lease a Car
Now we come to the most unpleasant part of leasing a car:
negotiating a deal.
There are two strategies to consider when approaching a
dealer about a specific car. The first strategy that is
recommended by Mark Eskeldson in his book "Leasing Lessons
for Smart Shoppers" (an excellent reference). Eskeldson
says that you should not tell the dealer that you wish to lease
the vehicle until after you have negotiated a reasonable
purchase price. This excellent strategy in effect prevents the
salesman from using the lease terms to hide the true sales price
of the car. However, this approach has a disadvantage. Since the
residual and factor must be obtained from the dealer, you must
wait until the very last step in the negotiations to state your
intention to lease. Hence, you must invest a lot of time (and
frustration) before learning if the lease rates are reasonable,
or whether or not you can afford the payments. Furthermore,
without the residual and money factor, it is impossible to
compare make and model based on the total cost of the lease.
One way around this information dilemma is to work with more
than one dealer for the same make car. Contact the first
dealership and ask them about the lease program offered by the
manufacturer on the models that you are interested in. Be sure
to specifically ask for the residual value and the money factor.
Remember, a specific car will have different factors for 24, 36,
48, and 60 month leases. It's always a good idea to ask the
salesman to write these figures down for you. This prevents the
unscrupulous salesman from verbalizing inaccurate numbers only
to later declare "an honest mistake" was made if and
when you attempt to strike a deal.
Once you have the factor and residual for the models you are
interested in, you are free to negotiate with competing
dealerships for the same car without stating your intent to
lease until you are ready.
An alternative strategy is to ask the dealer about their
lease program up front. Once you have the specific terms of the
lease program being offered, use LeaseTips to evaluate the lease
and compare it to other lease programs. Finally, prepare for the
final round of negotiations by calculating payments for a range
of cap costs.
With either strategy, expect a significant amount of
"maneuvering" from the salespeople concerning the
lease agreement numbers. Some dealers will insist on negotiating
only on payments and will not share cap cost, and factors with
you. Your best weapon against this tactic is knowledge. Use the
information in LeaseTips to check and confirm every proposed
offer to make sure the numbers add up. A LeaseTips reader
recently had an experience where he was negotiating the cap cost
for a lease on a new car. The dealer proposed a cap cost that
was acceptable to both parties. A few minutes later the salesman
presented paperwork with a payment that represented a cap cost
of $1000 higher than the agreed upon figure. Because the
LeaseFacts reader was familiar with the numbers and was able to
calculate the lease payment, the "error" was
immediately spotted. When the salesman was questioned about this
discrepancy, he responded arrogantly, "These figures are
right. We calculated them with our Lease Computer." When
pressed further, the salesman challenged, "How do you know
what the payment should be? Do you have a Lease Computer?"
"No. But I do know how to calculate a monthly
payment." Five minutes later the payment was reduced to the
correct amount. This true story drives home the point: when
negotiating a lease, knowledge is power and you shouldn't be
afraid to use it.
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