Thinking about leasing a new vehicle? While it’s usually a pretty straight forward process, if you don’t do your homework before signing on the dotted line you could wind up making a few wrong turns that could be expensive. There are some facts that your local friendly car sales rep isn’t likely to tell you but that can in the long run save you quite a bit of money.
Leasing a vehicle these days can be a very attractive deal. But did you know that the cost of a lease is actually the pricing difference between what a vehicle is worth sitting on the lot brand new and what it’s expected worth for resale is when you return it plus any interest and fees. The higher a forecast value is on a vehicle, the less you pay for leasing it. If a manufacturer thinks the supply of used cars are on the low side, they will price the residual values at a higher rate. You can actually lease some new cars for less than you’d make a payment for on a used model.
You can negotiate most any leasing offer. Just like haggling the price of purchasing a car, if you research fair market value on a particular model you’re looking at leasing, you may be able to get a better price. Most dealers will drop the sticker price by about 5% if you go for a price negotiation. You can even negotiate your interest rate. It might take some fine print search, but asking for a lower rate is a big help. Another thing that can help lower your price is agreeing to put more money down than the standard lease down payment.
Stretching out your lease may cost you more in the end. While most leases are for three years, some manufacturers such as Toyota try to push for five years. This is especially true on models such as Camry, Corolla or Yaris. The reason why? Most warranties run out after three years. Keeping the car past the warranty length can put you responsible for costly repairs. If you do go for the extended lease, try for an extended warranty as well. A little extra each month could save you a big bundle in the long term. On the other hand, most dealers and car makers want you back for new wheels sooner rather than later, so a short lease is more likely to be subsidized.