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How to negotiate a car lease Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make smarter financial decisions by providing you with interactive tools and financial calculators that provide objective and original content. This allows you to conduct your own research and compare data for free and help you make sound financial decisions. Bankrate has agreements with issuers such as, but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The deals that are displayed on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including for instance, the order in which they be listed within the categories of listing and other categories, unless prohibited by law. This applies to our mortgage home equity, mortgage and other home lending products. But this compensation does have no impact on the information we publish, or the reviews that appear on this website. We do not cover the vast array of companies or financial offers that may be available to you.

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5 minutes read. Published on August 9, 2022.

Written by Allison Martin Written by

Allison Martin’s career began more than 10 years prior to that as a digital content strategist. Since then, she’s been featured in a variety of top 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 writing and editing for Bankrate from late 2021. They are dedicated to helping readers gain confidence to control their finances by providing clear, well-researched information that breaks down complicated topics into manageable bites.

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Are you thinking about a vehicle lease to drive around elegantly for less than what you would pay to purchase a new vehicle? Learning about the process of leasing cars, including getting familiar with the business terminology, as well as the ins and outs of lease agreements is an important part of getting a great deal. The process of looking around and researching deals and specials offered by various dealers is another great way to help negotiate a car lease confidence, ensuring that you get the most suitable lease contract for your needs. If you visit an auto dealership to purchase a new car the salesperson is expecting you to negotiate a price that is lower than the price they are asking for. However, this isn’t often the case with lease agreements, however you can follow this step-by step procedure to negotiate a lease. 1. Be aware of the terminology It’s easy to become overwhelmed by the terminology, particularly if you don’t work in the automotive business. However you could get yourself an advantage by understanding the jargon dealers use before you sit down for signing a lease agreement. Here are some of the most common lease-related terms used by dealers. Acquisition fee The acquisition fee, which is sometimes also known as the assignment fee or even the origination fee is a charge imposed by the dealer to sign the lease. This fee can range between a few dollars , according to Edmunds. If you don’t have the money to pay the acquisition fees up front when initiating the lease, it can be rolled into your monthly lease payment. Price for buyout A lease buyout generally involves the purchase of a vehicle leased at the conclusion of the contract, or, in certain cases, prior to the due date for its expiration. The price for buying out is the amount that the dealer will charge if you decide to take this step. Reduced cost of capCap costor capital cost reduction — are the upfront payment that reduces 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 cost of cleaning the vehicle and getting it in tip-top shape to be sold to someone else after you return it. Gross capitalized cost The vehicle’s sale price, also referred to by the term “market value is the capitalized gross cost. “This can be described as a fancy name for the price of the car, plus 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 an estimate of what the car will be worth at time of lease’s expiration. This figure is determined by depreciation and data from the industry. “With the residual value, the seller will estimate the value of the vehicle worth when you hand it in,” says Mike Quincy who is an auto writer and tester of Consumer Reports. “It’s placed at the beginning of the lease and is used in calculating your monthly payment.” 2. Find deals Google search for “special lease deals” will not get you the most value. Make sure to go further by creating a list of all the deals you come across and consider broadening your search to other areas of the city you live in. After you have an inventory of lease deals for your preferred makes and models, make sure to call every dealership to verify the particulars. You should also be aware of any other deals that may not be advertised on the internet. 3. Begin the negotiations once you pare down your list, plan an appointment at the dealership. Take a test drive of the cars you are considering and start the discussions. Some of the things the dealer could be willing to discuss include the purchase price. Do you plan to take the lease out at the end of the lease? If yes, the dealer may be willing to cut you a deal on the buyout price. “This is a great price to negotiate before the start of the lease if you feel there’s a good chance that you’ll decide to purchase the car at the conclusion term,” says Undercoffler. Negotiating the buyout price in advance is essential, because typically it’s not possible to negotiate the cost once the lease has ended, says Undercoffler. Disposition fee You can be able to get a discount on the disposition fee in the event that you do not intend to turn the vehicle in or swap it out to another lease once the lease expires. It is important to discuss it prior to the start of the lease, rather than trying to get around it after the expiration of the lease. Gross capitalized cost Often dealerships will use a low monthly payment as a marketing tool to attract customers. But, it is important to try to negotiate the vehicle’s selling price, which is also its gross capitalized cost. By negotiating, you may be able to get an affordable monthly installment without having to resort to prolonging the lease. “The capitalized gross cost will affect the monthly payment and the final buyout amount of the car. This cost is 100 percent to be negotiated,” says Nathan McAlpine, owner of CarMate which is an auto broker firm. In certain circumstances, however for instance, if dealers are offering a specific monthly lease special it could be difficult to bargain. In such instances the lease conditions are generally predetermined, according to Undercoffler. Amount of mileage Most leases limit the number of miles you may drive, usually to 10,000-12,000 miles per year. If you go over this annual limit the lease will impose the possibility of paying a fine. Don’t be tricked into accepting an allowance for mileage that is low if you are a frequent driver. Instead, ask for a greater allowance at a discounted rate when initiating the lease, to save cash when you are ready to turn the car in. “If you’re certain you’ll be using more than the mileage allowance, it’s a very good option to negotiate a higher mileage cap for an up-front fee, or no fee in the first place, instead of paying the per-mile penalty when the lease expires,” says Undercoffler. “Just know that if you negotiate a higher mileage cap will decrease the residual value of the vehicle as well as the buyout amount, since the car will theoretically have more miles on it.” When you negotiate your mileage allowance, it’s essential to be aware of the number of miles per year you typically travel. “If you purchase extra miles in advance but you can’t claim the money back if you do not use the miles,” says Quincy. Money factor The cash factor is the rate of interest you pay to lease the vehicle. If you have very good credit, which is typically 740 or higher -it shouldn’t be difficulty securing the lowest interest rate the dealership offers. 4. Close the deal It is important to review the entire lease agreement before you seal the contract. Lease agreements generally include the following information the down payment required If any. The price of the lease is also known as the money factor or rent charge. It is the value that will be paid for by the car at the beginning and end period of lease. The annual mileage limit. A detailed fee schedule, which includes the costs for wear and tear excess damage and other charges you may incur at the end your lease. The cost of ending the lease earlier. What cannot be negotiated? Although you are able to negotiate a variety of fees, there are limits. However, you’re not likely to get much success negotiating the following fees: Acquisition fee Dealerships typically won’t waive this administrative fee however, they can add it to your lease payment if needed. Residual value is not negotiable since it will account for depreciation and industry statistics. Additionally, reducing the residual value too significantly means that the dealer could be unable to recover the cost if you decide to buy the vehicle instead of turning it in. The bottom line is that it’s possible to find a great bargain on a lease for a car, but you’ll want to prior to visiting the dealership. It’s not just important to learn the jargon dealerships use and the jargon they use, but also compare offers from multiple dealerships, learn what’s negotiable and be sure to read the fine print of the lease agreement before sealing the contract. Learn more

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Written by

Allison Martin’s career began more than 10 years ago as a digital media strategist, and she’s since been published in several leading 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 writing and editing for Bankrate since the end of 2021. They are passionate about helping readers gain confidence to take control of their finances with concise, well-researched and well-researched content that break down complex subjects into bite-sized pieces.

Auto loans editor

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