Finance

Can You Negotiate a Car Lease?

Car Lease – Settling on a lease agreement with your lesser is one thing but negotiating the lease is another— and the part that customers find complicated—step in the process.

You would think that most lease companies naturally offer customers the best deals, but do they?

Getting the best lease deal requires some negotiation effort on your part. Things can get tricky here sometimes. 

What Factors in a Lease Deal are Negotiable?

To determine what aspects of your lease agreement you can negotiate, you should understand how dealers set the lease price for cars.

The first factor determining a vehicle’s leave price is its depreciation value. You’re paying for the car’s depreciation over the contract period, so there is a fee for that. 

Technically, you’re lending money from the financial institution when you take a lease. This comes with an interest rate determined by the finance company.

Business vehicles eventually get tax credits on VAT; otherwise, sales tax adds to the price of the car lease. 

Credit score, mileage, contract length, and initial rental can influence the car’s price tag. However, its depreciation cost, interest rate, and VAT are the major determinants of price.

While all of these factors appear fixed, some others are negotiable. The vehicle price, interest rate, and mileage limit are some areas you can target to get the best car lease deal. 

1. Car Price

Successfully negotiating the cost of the vehicle means you get to pay a lower monthly fee since the interest and VAT reduces.

The dealer may suggest lengthening the payment period when you focus on negotiating monthly payments. This way, you get a smaller monthly fee but still pay the initial amount, just over a longer period. 

Rather than settle for a longer lease period, negotiate the vehicle’s price, otherwise called “capitalized cost”. The result of a lower capitalized cost becomes lower monthly payments. 

2. Mileage Limit

The mileage limit is the agreed number of miles on the vehicle. Exceeding these miles attract a penalty in the form of additional costs. 

If you choose a vehicle with low mileage, the value left on the car after your lease will be higher. Likewise, a high-mileage lease reduces the car’s residual value. This is why high-mileage leases attract increased monthly payments.

You can save future costs if you take care when negotiating the mileage limit. Be careful not to overlook the miles you will drive. 

Opting for a lower mileage might be your technique to reduce cost but think about how the penalty miles can add up. Negotiate annual miles leaving extra allowances to avoid situations where you have to pay a huge penalty fee. 

3. Interest Rate

This factor can be tough to negotiate since dealers are not obliged to disclose the “money factor” in the lease deal. 

If you can negotiate the financing price, there’s a chance you will get lower monthly payments.

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Tips to Negotiate a Good Deal on Your Car Lease

The following tips can aid your negotiation. Find out how:

1. Have an Idea About Your Preferred Car

It may seem inconsequential, but knowing the specific car you want before approaching the dealer can influence the negotiation. 

There is plenty of information on the best car leases online, so you simply have to do your research. Find the best vehicle type and model for your needs and decide on those that make a good alternative.

2. Choose a Car That is In Stock

Check the leasing company’s inventory while researching and ensure the car you want is in stock.

This gives you an advantage during negotiating as you won’t have to be indebted to the dealer for getting the car from another location. 

3. Pay Attention to the Manufacture Date

The vehicle’s price and mileage are important aspects when negotiating a deal but remember the manufacture date too. 

Note that a vehicle’s manufacture date does not always determine its value. It can be the opposite since some older cars are more valuable. But if the dealer wants to get rid of an outdated car, you can leverage this during negotiation.

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Conclusion

The whole point of leasing a car is enjoying the vehicle while escaping the hassles of owning it. Knowing how to negotiate your lease properly opens you up to even more financial gains. Research the process thoroughly and choose a dealer that can work you through getting the best car lease deal.

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