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First, if she really only drives 5 miles a day, get a lower mileage lease. 12k/yr is the normal lease. They usually offer 8k/10k/12k/15k leases. All with different residuals. This could lower your payment even more.

Her school is literally 2 miles from our house. We use my SUV for everything. Granted, if her car were nicer, we would probably use it more. I would say she averages 500 miles a month. I didn't realize that you could lower the mileage totals to decrease the payment and that may be an option for us.

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If you lease and are significantly under mileage, the dealer "wins". You have to either buy the car for residual (hence dealer gets paid, but vehicle is "worth" more) or give a higher value asset to them with nothing to show. Of course you could use it to negotiate your next purchase, but they're still perpetuating the cycle.

Like I said, this is not my ideal situation but given where we are, it seems to make the most sense from a financial standpoint.

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Consider if you will be adding options to the vehicle spec'd in the advertised lease. This will affect the negotiations and usually the dealers get and advantage here.

I figured this was the case and the lease deal states it must be taken from dealer stock so there really isn't much I can do about that.

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The key is negotiating the price of the vehicle just as if you were purchasing.

So if I were to negotiate the price to lower than what the deal is currently using then I can also lower the monthly payment? Am I understanding that correctly? Basically what you're saying is to go to the dealership and act as if I were buying the car and get the price as low as possible. Once that is done I tell them that I want that price but work it up as a lease?

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Posted by Will Cover

St. Louis, MO

Member since Mar 2007

38705 posts

Posted on 5/26/14 at 9:52 pm to iAmBatman

quote:
So if I were to negotiate the price to lower than what the deal is currently using then I can also lower the monthly payment? Am I understanding that correctly? Basically what you're saying is to go to the dealership and act as if I were buying the car and get the price as low as possible. Once that is done I tell them that I want that price but work it up as a lease?

Leasing provides a good deal for four parties - the sales person, the F & I guy, the dealership’s owner and the finance company (leasing company). It is a lousy deal for the customer. Leasing adds a layer of complexity to the deal that allows the salesman to hide or misrepresent the true purchase price.

You'll be asked early on in the process whether your plan to purchase or lease. Don't answer that question. Simply state that you are unsure at this time.

Work on the price of the vehicle first. And negotiate as if you don't need the vehicle.

What you have to be careful of is the F&I will catch on to this and try to make it up on the back end to get you back to the advertised special. Make sure you familiarize yourself with the following:

Residual?

Capitalized cost reduction?

Acquisition fee?

Disposition fee?

Money Factor?

or else you'll get lost in the whole back end of the deal process.

This post was edited on 5/26/14 at 9:54 pm

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Posted by LSUtigerME

Walker, LA

Member since Oct 2012

3817 posts

Posted on 5/26/14 at 9:52 pm to iAmBatman

quote:
So if I were to negotiate the price to lower than what the deal is currently using then I can also lower the monthly payment? Am I understanding that correctly? Basically what you're saying is to go to the dealership and act as if I were buying the car and get the price as low as possible. Once that is done I tell them that I want that price but work it up as a lease?

Yes. However, the "dealer contribution" may be removed at their discretion, and they may try to squirm on MF. Usually the advertised deals are at a reasonable price (ie. not at MSRP). You may be able to knock a little more off if you put in the work. Usually this only comes into play when negotiating outside the listed car.

I'd figure out the Residual %, money factor, and any cap cost reductions applied and go from there. This will also help determine whether leasing is actually a better deal for you. Check out the edmunds forums. They usually have a dedicated thread for each vehicle lease and will list these factors.

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Posted by brgfather129