Everything You Want to Know about Negotiating a Lease

[PowrRam]

That is hilarious. The guy is not in touch with reality at all. I can't believe how he makes millions selling this crazy stuff. He is so much as gainst credit cards but his web site accepts credit cards for paymnent. You've got to admit he is a marketing genius.

I think his methods and techniques are quite helpful for a certain segment of consumers. But that is a minority of people.

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[GOATram]

I think his methods and techniques are quite helpful for a certain segment of consumers. But that is a minority of people.

Sent from my Nexus 7 using Tapatalk

Agreed.

 

[LegionRider]

Thanks for taking the time to post your thoughts and experiences. It does shed some light on an avenue I am not very familiar with.

 

[mainard]

Thanks for the post PowrRam Im still waiting for IRsmart post regarding how to lease since he is in the profession and done thousands, not trying to be rude just want his insight and what are donts and do's and post as a member and not as a salesman.

question i have on leasing, if the price of the truck you want is above your means if you purchase but can lease to own is it a good idea? and how does lease to won work on mileage? and you will know what your residual price after the lease so you can pretty much know what your monthly payment will be after the 36months as a purchase of a used car right? Thanks

 

[IRSmart]

@IRSmart So no advice for leasing? You called @PowrRam out but didn’t give any true rebuttal except that you’re a sales person.

I didn’t “call anyone out,” just told everyone to take the post with a grain of salt. I have better things to do than get into a ******* match with anybody on the internet which is what will happen if I start dissecting it, so I’m choosing to stay distant from the topic, that’s all.

 

[Rado]

What a good read ! I never lease but man your info is great, A lot would apply to someone buying a vehicle ! Thanks for posting and I will be following

 

[troutspinner]

I didn’t “call anyone out,” just told everyone to take the post with a grain of salt. I have better things to do than get into a ******* match with anybody on the internet which is what will happen if I start dissecting it, so I’m choosing to stay distant from the topic, that’s all.

You stated in a prior post that you would.

Folks, take this article with a large grain of salt. It has a lot of good information, but also a lot of wrong information. I’m on my phone at the moment but I am happy to do a friendly counter-info post when time permits.

Please excuse the calling out term, it was just slang. Seriously though, I am trying to learn about it. Heck, I'm close enough to your dealership that I might actually take the ride if you educated and offered a good price.

 

[PowrRam]

question i have on leasing, if the price of the truck you want is above your means if you purchase but can lease to own is it a good idea?

Wow, talk about a loaded question! Generally speaking, if something is above your means to buy you should stay away from leasing it as well. BUT, there could be exceptions. One exception would be if you were a younger person trying to establish credit and you needed a car to get you to and from a new job. You want reliability, new technology, safety, and a warranty. You probably couldn't afford to buy a new vehicle, because you don't have the down payment, but you could lease. A new Hyundai Elantra ($16,000) or even a Hyundai Sonata ($22,000) could be leased for $150 (Elantra) and ($209) Sonata with little or nothing down.

Everybody is different. If you want a new car, don't have the down payment and know you can swing the monthly payments, it might be OK for you to lease.

and how does lease to won work on mileage?

You are allotted a certain number of miles during your lease. If you are way under the mileage allowed, it might make sense to buy the vehicle. It depends on the book value of your vehicle and then consider the mileage you've put on it.

and you will know what your residual price after the lease so you can pretty much know what your monthly payment will be after the 36months as a purchase of a used car right? Thanks

Yes, the buyout price is given in the lease contract. Keep in mind you will have to pay any sales tax on that amount. Also, that price in the lease might be negotiable. Doubtful, but could be.

I've only bought one vehicle at lease end because I mostly lease for business purposes. That was my mom's lease of a 2009 Impala, but that was a special case. (Hey, I forgot about that one. Turns out I've leased 13 vehicles, not 12.) This is a great story and I might have to tell the whole thing at some point, but basically during the depths of the Great Recession she went in for an oil change on her older Impala and the salesperson talked her into leasing a new Impala. He really socked it to her on price. So bad that when I found out about it I marched over there and unwound the deal and got her another similar Impala for $125 less per month. Anyway, at the end of the lease the buyout amount was about $4,000 less than the going price for that car. We basically had to buy it, as it was profit waiting to happen.

At the end of any lease I'd look at the buyout amount, tally up the amount I've already spent on the vehicle, then look up the book value of the car. If you have low mileage, that's a plus in favor of buying. Then it's just a math problem. If you like the car and it makes financial sense to buy it, I'd go for it. A bonus is that you know the maintenance history of the car.

I'm going to consider buying my wife's 2016 Charger. With zero down and 35 payments of $257 a month we will have paid in $8,995. Less the last payment on her Altima, $271, made by the dealer as an incentive, we are into that Charger for $8,724. If the going price on this car is $22,000 and at lease end and our buyout is $20,000 or less, we've got some hard thinking to do. It's been a great car. We are on a pace to finish about 2,000 miles below the allotment.

 

[BossHogg]

I didn’t “call anyone out,” just told everyone to take the post with a grain of salt. I have better things to do than get into a ******* match with anybody on the internet which is what will happen if I start dissecting it, so I’m choosing to stay distant from the topic, that’s all.

You called him out, your comment implied what was posted by the OP wasn't good info, erroneous, etc. Then you clamed up making excuses of not wanting to enter into a ******* contest, one that you started. You should have kept quiet from the get-go.

I read his posts and while I am not on the selling side I certainly am on the buying side and have many years of experience dealing with salespeople and leases. Everything he said is representative of the leasing process.

 

[gregs2018ram]

A disposition fee is pretty well standard in all leases these days. You can't really NOT agree to pay it unless you just don't want to sign the lease.

What's even worse, years ago, this fee was waived if you bought the vehicle. Now, companies like FCA/RAM even charge a fee if you even choose to buy the vehicle.

Currently, its $395 with Ram.

you really shouldn't call it a "lease termination fee". Its proper name is a "disposition fee".

NOT to be confused with an "inception fee", which is like a $595 fee for originating the lease.


11. Do not agree to pay a lease termination fee (sometimes called a disposition fee). This is usually imposed by the bank that is financing the lease, not by the dealer. I don't mean the fee you would pay if you terminated the lease early, I mean the fee they sneak into the contract where they get $300 when you turn in the vehicle and don't lease through that bank again.

 

[BossHogg]

A disposition fee is pretty well standard in all leases these days. You can't really NOT agree to pay it unless you just don't want to sign the lease.

When negotiating a lease you need to look at the big picture, the fees at the start of the lease, the end of the lease, and the money factor (discussed in post #16) of the lease. High lease fees could be accompanied by a low money factor but you won't know until it is all considered which is influenced by your credit score.

Also, take note of the residual value, compare this number to current used vehicle pricing to see if it is a reasonable number. Financing companies use Kelly's Blue Book, for example, to calculate a residual value and we all know KBB or NADA do not buy vehicles. Read #3 at https://www.bankrate.com/loans/auto-loans/top-10-leasing-booby-traps/

A financing company is in business to make money and how they get their profit is a mix of fees, residual value, and the money factor.

I have not leased a vehicle in a few years, the last one was for my college kid. What I did was my homework for a target vehicle (2014 Chevy Cruise). I calculated the residual, amount of the vehicle sale, interest rates, mileage, and term of the lease (3 years). Using this information I came up with a reasonable total cost of the lease which I provided to the dealer. I told the dealer to write the lease up however he wanted, include whatever charges they needed but in the end, if the monthly lease amount times the lease term plus all fees didn't equal my number, no deal. My son drove the Chevy Crusie to the lease end and his graduation.

 

[troutspinner]

I learned yesterday that in Pennsylvania, where I reside, along with a 6% sales tax, there is also a 3% PTA (Public Transportation Assistance) tax, bringing tax up to 9% to lease.

3% may not sound like much but damn, they found another way to soak more money from you.

 

[PowrRam]

I learned yesterday that in Pennsylvania, where I reside, along with a 6% sales tax, there is also a 3% PTA (Public Transportation Assistance) tax, bringing tax up to 9% to lease.

3% may not sound like much but damn, they found another way to soak more money from you.

I did not know this. I do know that PA residents have to pay a sales tax on internet purchases. So far, only PA and WA have that tax. So far.

 

[PowrRam]

A disposition fee is pretty well standard in all leases these days. You can't really NOT agree to pay it unless you just don't want to sign the lease.

Yes, I brought the disposition fee up with the finance person when I was finalizing my latest lease and he said that if I were to lease with the dealership again, and it would be a different bank backing the lease they could make that go away when I turn in my truck in three years. So apparently that is negotiable.

What's even worse, years ago, this fee was waived if you bought the vehicle. Now, companies like FCA/RAM even charge a fee if you even choose to buy the vehicle.

Currently, its $395 with Ram.

My fee is $350 if I opt to purchase the vehicle. I would assume this is negotiable, but I'd put the odds of getting it dismissed as low odds.

you really shouldn't call it a "lease termination fee". Its proper name is a "disposition fee".

Thought I had clarified that in my write-up.

11. Do not agree to pay a lease termination fee (sometimes called a disposition fee). This is usually imposed by the bank that is financing the lease, not by the dealer. I don't mean the fee you would pay if you terminated the lease early, I mean the fee they sneak into the contract where they get $300 when you turn in the vehicle and don't lease through that bank again.

NOT to be confused with an "inception fee", which is like a $595 fee for originating the lease.

They can try to impose that, but I would walk away from that deal. This was called an "acquisition fee" and was a big N/A on my lease papers.

 

[PowrRam]

A financing company is in business to make money and how they get their profit is a mix of fees, residual value, and the money factor.

I have not leased a vehicle in a few years, the last one was for my college kid. What I did was my homework for a target vehicle (2014 Chevy Cruise). I calculated the residual, amount of the vehicle sale, interest rates, mileage, and term of the lease (3 years). Using this information I came up with a reasonable total cost of the lease which I provided to the dealer. I told the dealer to write the lease up however he wanted, include whatever charges they needed but in the end, if the monthly lease amount times the lease term plus all fees didn't equal my number, no deal. My son drove the Chevy Crusie to the lease end and his graduation.

Agreed. They can massage the numbers behind the scenes to their liking as long as the end number is to my liking.

 

[troutspinner]

So I discussed leasing with 3 different dealers. All of them were pretty close to each other with pricing, quick and systematic. Roughly $520 per month, no money down, 36 months, 12k miles a year on roughly a $52k MSRP truck. I did not let them know that I had communication with other dealers. I am sure if I had them compete, I may have been able to have them come down a little, maybe throw in some service, etc.

Two of them talked about the attractiveness of receiving a check for the equity in my current truck. After some hard thinking, I decided that I’d rather finance.

My thought process is that if I “cashed in” my current equity, if I ever wanted to buy again, I would have to come up with a similar amount down as what I would be getting a check for now if I wanted to stay in my monthly payment comfort zone.

If I did not have the equity I have, I could see leasing as very attractive but the type of person I am, I think I would always kick myself in the butt for not creating equity. There are financial arguments that could be made to counter my thought process, I am well aware and as mentioned by others, leasing is a very personal thing.

Thanks again @PowrRam for taking the time to create this thread. It was definitely thought provoking and the timing was perfect for me as I was just starting to look into pricing.

Oh, I ordered a Ram today. . I’ve never ordered a vehicle before and always settled with options that dealers had on the lot. This one is configured exactly how I want. Can’t wait!

 

[PowrRam]

@troutspinner, how long is the build process? When will you get your new truck?

 

[troutspinner]

@troutspinner, how long is the build process? When will you get your new truck?

They said 6-8 weeks. In my area, finding a Big Horn that has the sports appearance package, 3.92 gears and the 9 speakers with subwoofer is literally non-existent in a 200 mile radius. If I gave in and went without the sports package, I could have my choice all day long but this time I don’t want chrome, I want single color.

 

[PowrRam]

Suggesting you make a few grand off your credit cards each year implies you’re living beyond your means.

No, it means he's using his credit card for purchases, paying the balance off monthly, and getting rewards, either airline mileage, cash back, or some other bonus.

 

[Vloneboy392]

What a great post!