Leasing a vehicle differs from buying a car. In essence, you’re just paying on the car’s depreciation, interest and fees while holding the lease. To get the best deal, know more about the leasing process.
Lease a Car With a High Residual Value
Leasing a car with a higher residual value works best if you want the lowest monthly payments, but, you don’t intend to buy the car at the end of your lease, according to Edmunds.com. Here’s why.
The residual value of a car is the amount of money you can buy the vehicle for when your lease expires. (But remember, you aren’t going to buy the car if you opt for this.) This number is important to your lease deal because it affects your monthly payments, states Edmunds.com. Consider why:
- Artificially inflated residual values (also called a subvented lease) give you lower monthly payments.
- A subvented lease is designed to move slower-selling cars off the lot with attractive, low monthly payments.
- Banks issuing lease contracts set residual values, so they’re non-negotiable.
In essence, get a best rated, new luxury crossover SUV lease deal for less per month than you would a basic, lower priced American minivan if you base your choice on the residual value, says Edmunds.com.
Negotiate Your Lease
Though the residual value isn’t negotiable, other things are, according to U.S. News & World Report, including:
- Capitalized costs: This is the amount you’ve agreed to finance. Reduce this cost, and your down payment on the lease, with a trade-in if you have one.
- Interest rate: Negotiate interest rates with a high credit score.
- Buyout price: If you intend to buy the car after the lease, negotiate it to as low as possible, however, that may mean higher monthly payments. But payments are mostly based on residual value.
- Mileage: Negotiate for either a reduction in excess mileage charges, or, a higher cap on the maximum mileage you’re allocated during the leasing period.
Find Lease Deals (They’re Out There)
Consider these deals if you can get them:
- Used cars: Lease a used car to save thousands of dollars, says Edmunds.com. Find a franchised dealer leasing certified pre-owned (CPO) vehicles less than four years old and with less than 48,000 miles.
- College students: Recent college grads can get leasing rebates and discounts with proof of eligibility.
- Search sites for deals: Search online for lease promotions. Start with Edmunds.com and search for lease deals. You’ll find picks on lowest monthly payments to best mileage rates.
Avoid Bells and Whistles
To keep upfront and monthly costs down, avoid costly add-ons, such as:
- Gap insurance is offered by leasing companies but if you need it, first check with your own insurance company or bank to see if they offer it.
- Extended warranties aren’t necessary for leases.
- Accessories and design details, like striping, may turn up as hidden and unnecessary fees.
Triple Check Documents and Math
Read every document before signing. Make sure:
- There are no blanks or incorrect numbers.
- You’ve agreed to all terms.
- There are no extra fees.
- The length of your lease is not longer than agreed upon.
One last tip: Don’t break your lease. It’s a costly mistake involving financial penalties, according to Legalzoom.com.