Negotiating an Auto Lease

Many dealers try to convince customers to lease a vehicle rather than buy it because they can usually make a better profit on an auto lease. Most dealers will behave as if the terms of an auto lease can’t be negotiated – but they can. You can save money by negotiating the different terms of an auto lease. Here are some items you should negotiate in order to get a better deal on your next auto lease:

The cost of the vehicle: Recent studies indicate that less than 9 percent of consumers bargained for a lower sales price on an auto lease, compared to over 75 percent of consumers buying the auto outright. Most consumers don’t realize that the cost of the car is negotiable – even with an auto lease. The lower the cost of the car, the cheaper your auto lease will be. Some dealers may try to write the auto lease contract using the original price and not the price you bargained for – always check your auto lease contract for accuracy.
The residual value: The residual value of a car is what the car is expected to be worth at the end of the auto lease if you decide to buy the car instead of turning it in. The residual value, in effect, is the price you’ll pay to keep the car. You should negotiate the residual value if there’s even a remote chance you may want the car. But, if you know you don’t want to purchase the car, allowing the residual value to stay high will lower your monthly payments. Again, if there’s a small chance you may want to buy the car, negotiate the residual value down as low as you can.
Negotiate the end of the auto lease period: Although most lease periods run for 24 or 36 months, you may be able to negotiate one that meets your individual needs. Keep in mind that the shorter your lease the higher your monthly payments will be.
Rate of depreciation: Check the vehicle's estimated rate of depreciation in blue books or through services. The cost of many auto leases is calculated by subtracting a predetermined residual value from the MSRP (manufacturer's suggested retail price). If you have no plans to buy the vehicle at lease-end, you benefit from a high estimate of its residual value. On the other hand, if you plan to purchase the vehicle, you want to be sure its value at the end of the auto lease has not been overestimated.
Guaranteed buy-back: To protect yourself further, try for an auto lease that includes a guaranteed buy-back, which means that if you decide to buy the vehicle at the end of the auto lease, you pay nothing more than its current fair market value.
Total cost: Be sure the quote for the total cost of the lease includes everything you'll have to pay, including registration, taxes, security deposit, down payment, and all the other administrative fees. Contest any fees or charges that seem unreasonable.
Lease-end service charges: Inquire about lease-end service charges, including the disposition fee, which is what you may be asked to pay to get the car ready to be resold. These fees can amount to hundreds of dollars when it's time to return the car. Sometimes called a "termination fee," a disposition fee is negotiable and can even be waived completely, so strongly object to paying it on the grounds that getting the merchandise into salable shape is part of every retailer's cost of business. You’re already subject to penalties if the vehicle you return has suffered more than normal wear and tear, so why should you also pay to have the dealer to make a higher profit on its resale?
Mileage allowance: Most auto leases specify a mileage allowance that is the maximum number of miles you can drive the vehicle during the lease term without having to pay excess mileage charges. The excess mileage charge on many leases is 15 cents a mile, but can reach as high as 40 cents a mile. Even if your auto lease has a mileage allowance of only 10 cents a mile you'll still have to pay $100 for each extra 1,000 miles.

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