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How to negotiate a car lease Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with financial calculators and interactive tools, publishing original and objective content. We also allow you to conduct your own research and compare data for free - so that you can make sound financial decisions. Bankrate has agreements with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The offers that appear on this website are provided by companies that compensate us. This compensation can affect the way and when products are featured on the site, such as, for example, the order in which they appear in the listing categories in the event that they are not permitted by law. This applies to our mortgage home equity, mortgage and other products for home loans. But this compensation does not influence the content we publish or the reviews that appear on this website. We do not contain the universe of companies or financial offerings that could be accessible to you.



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10'000 Hours/Getty Images
5 minutes read. Published on August 9, 2022.
Written by Allison Martin Written by

Allison Martin's work started over 10 years prior to that as a digital content strategist, and she's since been featured in numerous prestigious financial 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 the confidence to manage their finances by providing clear, well-researched information that breaks down otherwise complex topics into manageable bites.









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Are you considering taking a vehicle lease to drive around with style at less than what you'd spend to buy the new car you want? Understanding the car lease process, including brushing up on the industry terminology and the details of lease agreements, is essential to getting a great deal. The process of looking around and researching offers and discounts offered by multiple dealers is another great way to help you negotiate a car lease with confidence and ensure that you receive the most suitable lease contract to meet your needs. When you walk into a dealership to buy a brand new car the salesperson is expecting you to make an offer lower than the price they are asking for. It's not usually the case for leases, but you can follow this step-bystep approach to negotiate a car lease. 1. Learn the jargon easy to become overwhelmed with the language, especially if are not in the auto business. However, you can give yourself an advantage by understanding the terms used by dealers prior to when you sit down in front of a leasing contract. Here are some of the most common lease-related terms that dealers use. Acquisition fee The acquisition fee, which is sometimes called the assignment fee, or the origination fee, is assessed by the dealer to sign the lease. The amount of this fee can vary from $0 to $1000, in accordance with Edmunds. If you don't have enough money to pay the acquisition fees up front when initiating the lease you can roll it into your monthly lease payments. Buyout price A lease buyout generally involves the purchase of a vehicle leased at the end of the lease or, in certain cases, prior to the scheduled end date. The buyout price is the amount that the dealer will charge if you opt to do this. Cap cost reduction Cap cost reduction -- or capital cost reduction -- are all upfront charges that decrease the amount you can finance. It could be a result of trade-in credits, incentives, rebate amounts or even a bigger down payment. Disposition fee Disposition fees cover the expenses associated with cleaning and preparing the vehicle to keep it in tip-top shape to be sold to someone else after you return it. Gross capitalized cost The vehicle's cost of sale, also referred to by the term "market value, is the cost that has been capitalized gross. "This may be a fancy term for the price of the vehicle plus any other charges tax, balances and balances," says David Undercoffler who is the editor-in-chief at Autolist. Residual value The Residual value represents an estimate of what the vehicle is worth at the expiration of the lease. The figure is determined through depreciation and industry data. "With the residual figure, the seller estimates the value of the vehicle worth when you hand it in," says Mike Quincy, auto tester and writer for Consumer Reports. "It's placed at the beginning of the lease and is used in calculating your base monthly payment." 2. Find deals Google search for "special lease offers" isn't enough to find the most value. Make sure to go further by making an inventory of the offers you can find, and think about expanding your search to areas outside of your area. When you've compiled the list of lease offers that you like on the top brands and models, contact each dealership to confirm the specifics. It is also advisable to ask about any other deals that aren't advertised online. 3. Begin the negotiations once you've narrowed your options, make a visit to the dealership. Try out the vehicles you are considering and start the discussions. Some items the dealer may be willing to discuss include the purchase price. Are you planning to buy out at the end of the lease? If yes, the dealer could be willing to give you a deal on the buyout cost. "This is a good cost to negotiate before the start of the lease when you believe there's a decent chance you'll be looking to purchase the car at the end period," says Undercoffler. Negotiating the purchase price up front is particularly important as it's typically not possible to negotiate the cost once the lease is over, according to Undercoffler. Disposition fees You may receive a reduction on the disposition fee when you don't plan to sell the car or swap it out to another lease once the lease expires. Make sure to negotiate it at the start instead of trying to negotiate it after the expiration of the lease. Gross capitalized cost is often the reason that dealerships use low monthly payments as a way to entice customers. But, it is important to attempt to negotiate the car's cost of sale that is also the capitalized gross price. Through negotiation, you could be able to secure an affordable monthly installment without the need to consider extending the lease term. "The capitalized gross amount will affect the monthly payment and the final buyout figure of the vehicle. The cost is 100% negociable," says Nathan McAlpine, owner of CarMate the auto broker company. In certain circumstances, however like when a dealer is offering the lease at a particular monthly rate it could be difficult to bargain. In such cases the lease conditions are generally predetermined, according to Undercoffler. Mileage allowance Most leases limit the amount of miles you are allowed to drive, usually to 10,000 to 12,000 miles annually. If you exceed this annual limit the lease will impose the possibility of paying a fine. Beware of being enticed by an allowance for mileage that is low if you travel a lot. Instead, ask for a greater allowance at a lower cost at the time of establishing the lease so that you can save money when you turn 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 at all, rather than paying the per-mile penalty when the lease expires," says Undercoffler. "Just know that if you bargain for a higher cap on mileage that it will reduce the residual value of the vehicle and the buyout amount since the vehicle will theoretically have more miles." If you're negotiating your allowance for mileage, you need to understand how many miles per year you typically drive. "If you pay for extra miles up front, you won't get the money back if you don't use them," says Quincy. Money factor The cash factor determines the interest rate that you pay for leasing the vehicle. If you have excellent credit, which is typically 740 or higher -you should not have difficulty securing the lowest rate of interest that the dealership can offer. 4. Sign the contract You'll need to review the entire lease agreement before you seal the deal. Lease agreements usually contain the following information: The required down payment If there's one. The cost of the lease, also known as the money factor or rent charge. The value of the car at the beginning and end in the term. The annual mileage limitation. A comprehensive fee schedule which includes the costs for wear and tear excess damage, and any other costs you may incur at the end your lease. The cost to end the lease early. What isn't negotiated? While you may negotiate various charges, there are limitations. You won't have much luck negotiating the following: Acquisition fees: Dealerships generally do not waive the administrative fee but will allow you to add it to the lease payment should you need to. Residual value isn't negotiable because it is a way to account for depreciation as well as industry statistics. Also, lowering the value of residuals too far could cause the dealer to lose money if you choose to buy the car instead of turning it in. The bottom line is it is possible to get a good deal on a car lease however you must do your homework prior to visiting the dealership. Not only is it essential to know the terms dealers use, but you should also evaluate offers from different dealerships, know what's negotiating and read the fine print on the lease agreement before sealing the agreement. Learn more


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Written by

Allison Martin's work began over 10 years ago as a digital content strategist. Since then, 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 from late 2021. They are passionate about helping readers gain confidence to take control of their finances by providing precise, well-studied information that breaks down otherwise complex topics into digestible chunks.






Auto loans editor




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