As you’re probably aware, the price of a new car has been steadily increasing for years. In fact, in many states it costs more to buy than to lease one. But if you’ve always leased cars because the monthly payments are lower and the depreciation is taken care of by your leasing company, then now might be a good time to consider negotiating an SUV lease.
The key to negotiating a lower monthly payment on your SUV lease is to have a good idea of what you can afford before you start talking to dealerships. Keep in mind that the price of the vehicle is only one part of the equation – you’ll also need to factor in things like taxes, fees, and the amount of money you’ll need to put down at signing.
Once you have a budget in mind, it’s time to start learning about car leasing in general.
Here are three must know terms:
Residual Value: This is what the lease term will be worth at the conclusion of it. It’s determined by a third-party using data from the car and market to determine the expected value of the automobile.
Capitalized Cost: In a nutshell, the capitalized cost or cap cost is the vehicle’s price. You will frequently have to pay extra taxes and charges in addition to the cap cost.
Money Factor: The money factor is the way that interest rates are expressed in leasing. You may convert it to an easier-to-understand interest rate by multiplying it by 2,400.
Getting the Right Price:
The difference between the capitalized cost and residual value is what determines how inexpensive your lease will be. You can narrow the gap by bargaining for a low capitalized cost or obtaining a lease deal with a built-in cap-cost reduction.
You may also search for cars with a high residual value. Not all vehicles depreciate at the same rate. You’ve discovered one with a high residual value if you find one that depreciates slowly over its first few years. Every year, ALG’s residual value experts select the best performing automobiles.
Know What Numbers You Cannot Negotiate:
- Cars residual value
- Disposition Fee
- State/Local Taxes & Fees
- Acquisition Fee (sometimes negotiable)
Know What Numbers You Can Negotiate:
- Capitalized Cost (Price) – Always start here with negotiation
- Interest Rate
- Down Payment
- Monthly Payment
- Mileage Cap
- Buyout Price (must be done at before signing of lease)
- Documentation Fees
- Advertising Fees
- Shipping/Freight Charge (Get rid of this)
Know How Many Miles You Drive a Year Before Leasing:
You’re going to be penalized for driving too many miles when your lease is up if you go over the mileage limit. You might have 10,000, 12,000, or 15,000 miles a year built into your lease contract. If you drive more than that, you’ll be charged a per-mile fee when you turn the vehicle in. To avoid this, try to estimate your yearly mileage and negotiate a set number of miles you’re allowed to drive each year.
Understand the Total Cost of Your Lease
The bottom line is not your monthly payment, but how much the total cost of the lease is over the time you have the SUV. You can take the total monthly payments + down payment + all fees at signing. Then divide this total by the total number of months. Remember that the first months payment is paid at signing.
Example: If you had a 36mo lease for $300 a month plus $2,300 in total fees at signing, you need to remember to remove one month when calculating the total monthly payments.
Math: $300 x 35 + $2300 = $12,800
However, when determine the cost per car a month you would still divide by 36.
Math: $12,800/36 = $355
As you can see what you think you pay and what you actually pay can be gravely different.
Once you’ve found a few dealerships that have the SUV you want, it’s time to start negotiating. The first step is to get an idea of what each dealership is willing to offer. Most dealerships will give you a “walk-away” price, which is the lowest price they’ll accept. If you can get the dealer to come down to this price, then you’ve saved yourself the hassle of negotiating further.
If the dealership isn’t willing to budge on the price, don’t be afraid to walk away. There are plenty of other dealerships out there that would be happy to work with you. And remember, it never hurts to ask for a discount – especially if you’re buying a car that’s in high demand.
By following these tips, you can negotiate a great deal on your next SUV lease. So, what are you waiting for? Get out there and start shopping around!