Everything You Want to Know about Negotiating a Lease

[LugsLeadOut84]

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.

Here's some more to think about (or laugh about)....In NY State (and NJ, Illinois, and some others), when you lease you are required to pay the tax up-front. Even if you negotiate a "no money down" lease, you still have to pay the tax immediately - some lenders will not finance the tax (in NY you only have to pay sales tax on the amount the car will depreciate during the lease term - which is calculated at inception).

Great article and whether some agree with you or not - it was nice of you to outline it.

And I agree....NEVER put money down to lower your payment - especially tempting if you are trading in a vehicle. Whatever is put down on a lease is wasted and never recouped. You're basically paying to lower your monthly rate but you never get a return on that money - at the end of the lease it's gone. And never tell the salesperson what you can pay per month. They will back-into that number and you'll have no idea what you're paying for the car unless you do the math.

Also, like many topics, leasing is bad for some and beneficial to others - I hate when people blanket their opinions ("leasing is terrible", etc.) Maybe for you it is, but it works for some and no matter what anyone says, there's pro's and con's to both buying and leasing. Yes, you can't do serious mods, but you typically never have to pay for repairs - only standard maintenance, and you always have a reliable, newer vehicle. Not much happens that's not covered by the warranty in the course of a lease.

 

[Jimmy07]

Here's some more to think about (or laugh about)....In NY State (and NJ, Illinois, and some others), when you lease you are required to pay the tax up-front. Even if you negotiate a "no money down" lease, you still have to pay the tax immediately

Minor correction. In Illinois, you only pay tax on the amount of the car you’re using, not the full price (leases amount plus residual). No tax credit on a trade in, though. And, absolutely, the tax can be financed in the deal.

 

[quietpeen]

The only negative to putting money down is that if you are in an accident and the car is totaled you don’t get any money back-so all that money is gone, where as if you didn’t put any money down you would just be out whatever payments you put into it.

However to say you lose the money in a normal lease isn’t true. You pay a set amount on your lease no matter what. So if you pay all of it over 36 equal payments, or put money down and pay the remainder over 36 equal payments it’s still the same amount of money.

 

[LugsLeadOut84]

The only negative to putting money down is that if you are in an accident and the car is totaled you don’t get any money back-so all that money is gone, where as if you didn’t put any money down you would just be out whatever payments you put into it.

However to say you lose the money in a normal lease isn’t true. You pay a set amount on your lease no matter what. So if you pay all of it over 36 equal payments, or put money down and pay the remainder over 36 equal payments it’s still the same amount of money.

Maybe - I never did the full calculations - I just wonder if say putting $10,000 down has any significant financial benefit over paying more per month and keeping the $10,000. To me, you're basically buying a lower monthly payment...If someone has money to put down, put the money aside instead and use it to pay the monthly charge. It's better in your pocket. If this was a mortgage - different story - but a relatively short lease, I'm not sure.
And as you said, it's Russian Roulette putting money down and hoping something doesn't happen to the vehicle.

 

[quietpeen]

Maybe - I never did the full calculations - I just wonder if say putting $10,000 down has any significant financial benefit over paying more per month and keeping the $10,000. To me, you're basically buying a lower monthly payment...If someone has money to put down, put the money aside instead and use it to pay the monthly charge. It's better in your pocket. If this was a mortgage - different story - but a relatively short lease, I'm not sure.
And as you said, it's Russian Roulette putting money down and hoping something doesn't happen to the vehicle.

i would say there is no true financial benefit to putting 10 grand down, other than feeling good about lower payments per month.

 

[Kevin Falerios]

I leased my 2019 Bighorn 4x4 Sport with the 5.7 Hemi. From here on out, i plan on leasing all my vehicles. I LOVE vehicles (all makes and models) too much. I wish I was like Jay Leno and had a huge ass garage with over 100 vehicles in it. Everytime i've purchased, i've already gotten rid of the vehicle after 3 yrs anyways, and lost my ass, or had to roll negative into the next (and you can only do that so many times). Leasing is definitely not for everyone though. If you like to keep a vehicle for 5 yrs, don't lease. If you drive a **** load of miles, don't lease either. I paid extra for 15k miles a year too (cheaper to pay up front, than to get spanked when turning it in cause you went over). I lease with zero money down as well, 36 month lease, and 15k per year. Only additional warranty i added (raised my price $7 a month) was a coverage that protected the tires and wheels.

 

[BigRed4x4]

I leased my 2019 Bighorn 4x4 Sport with the 5.7 Hemi. From here on out, i plan on leasing all my vehicles. I LOVE vehicles (all makes and models) too much. I wish I was like Jay Leno and had a huge ass garage with over 100 vehicles in it. Everytime i've purchased, i've already gotten rid of the vehicle after 3 yrs anyways, and lost my ass, or had to roll negative into the next (and you can only do that so many times). Leasing is definitely not for everyone though. If you like to keep a vehicle for 5 yrs, don't lease. If you drive a **** load of miles, don't lease either. I paid extra for 15k miles a year too (cheaper to pay up front, than to get spanked when turning it in cause you went over). I lease with zero money down as well, 36 month lease, and 15k per year. Only additional warranty i added (raised my price $7 a month) was a coverage that protected the tires and wheels.

What is your monthly lease rate if you don't mind me asking? For a nicely equipped big horn, 36 month with 15k miles if I remember correctly the MSRP was 50k I was quoted at $400 each month but that was with $6500 down. They threw that in when I told them that was how much my trade equity was on my current truck but I hadn't actually offered to put that down.

I ended up walking away from that deal.

 

[Kevin Falerios]

What is your monthly lease rate if you don't mind me asking? For a nicely equipped big horn, 36 month with 15k miles if I remember correctly the MSRP was 50k I was quoted at $400 each month but that was with $6500 down. They threw that in when I told them that was how much my trade equity was on my current truck but I hadn't actually offered to put that down.

I ended up walking away from that deal.

My truck had an MSRP of just over $50,000, I put nothing down, 36 month lease, with 15k miles per year, and my monthly payment is $550. So your quote sounds about right, cause if i put $6500 down i think my payment would be $400 as well. I called another Dodge dealership prior to this deal and was quote $1600 down and a monthly payment of $680... i said, no thanks.

 

[16RamHemi]

I know you can go on the edmunds forums and they will give you the residual and MF fkr your particular lease. From what i know (could be wrong) these numbers they give you are from chrysler. I know the residual is sey from the mfr but is the MF negotiable? Is that a number the dealer will play with to make more money? Is it credit score dependent?

 

[jk101]

I know you can go on the edmunds forums and they will give you the residual and MF fkr your particular lease. From what i know (could be wrong) these numbers they give you are from chrysler. I know the residual is sey from the mfr but is the MF negotiable? Is that a number the dealer will play with to make more money? Is it credit score dependent?

The residual is set by the bank, dealers can definitely play with the money factor to make some extra $$ on the deal. Also, leashackr is a great website for leasing tips & info

 

[16RamHemi]

The residual is set by the bank, dealers can definitely play with the money factor to make some extra $$ on the deal. Also, leashackr is a great website for leasing tips & info

any idea what the magic credit score number is to get the best MF?

 

[PoMansRam]

any idea what the magic credit score number is to get the best MF?

~750 or higher is generally great, but I've seen incentives available to those with "lower" credit scores.

 

[Elkman]

Bottom line, a lease is a dumb idea when buying a truck for personal or business use. For a business, any vehicle with a GVWR of 60001 or more pounds qualifies for a full write-off under Section 179 of the tax code. Even a 1500 class pickup meets that requirement. For personal use the least expensive way to buy a truck is to pay cash and if you cannot afford to do that with a new truck then the next cheapest way is to get a bank loan and to shop around the banks. Certain banks are interested in pushing auto loans and they will offer lower interest rates than a bank that is focused elsewhere.

Where a lease makes sense is when a business is buying a vehicle with a less than 6001 GVWR rating as then the entire lease payment can be expensed. In a non-business situation there is no gain with a lease, only you are paying interest on the value of the vehicle as sold by the dealer and there less the residual value (i.e. the greater the depreciation over the lease period) the more you will be charged. In other words the lower the resale value of a particular vehicle, the more it will cost you in monthly lease payments. Easy to find online the relative resale value of used vehicles and it varies greatly.

On the flip side, a vehicle coming off a 2-year lease can be a relative bargain. The first "owner" took the greatest depreciation hit with the vehicle and the second owner gains as a result. These are also vehicles where the prior owner was limited to the extent to which they could damage it with "customization" and so the vehicle is going to be more reliable in the long run.

 

[troutspinner]

Bottom line, a lease is a dumb idea when buying a truck for personal or business use. For a business, any vehicle with a GVWR of 60001 or more pounds qualifies for a full write-off under Section 179 of the tax code. Even a 1500 class pickup meets that requirement. For personal use the least expensive way to buy a truck is to pay cash and if you cannot afford to do that with a new truck then the next cheapest way is to get a bank loan and to shop around the banks. Certain banks are interested in pushing auto loans and they will offer lower interest rates than a bank that is focused elsewhere.

Where a lease makes sense is when a business is buying a vehicle with a less than 6001 GVWR rating as then the entire lease payment can be expensed. In a non-business situation there is no gain with a lease, only you are paying interest on the value of the vehicle as sold by the dealer and there less the residual value (i.e. the greater the depreciation over the lease period) the more you will be charged. In other words the lower the resale value of a particular vehicle, the more it will cost you in monthly lease payments. Easy to find online the relative resale value of used vehicles and it varies greatly.

On the flip side, a vehicle coming off a 2-year lease can be a relative bargain. The first "owner" took the greatest depreciation hit with the vehicle and the second owner gains as a result. These are also vehicles where the prior owner was limited to the extent to which they could damage it with "customization" and so the vehicle is going to be more reliable in the long run.

Your first and second paragraph contradict each other. You say more than 60k lbs, I assume you mean 6K in the first paragraph but then you say less than 6k in the second paragraph.

 

[LugsLeadOut84]

↑ Elkman's closed mind-set is funny, because a lease is anything but dumb for some people, including me at this stage of my life. If I was hung-up on doing everything in the most economical way possible, I probably wouldn't drive a full-sized truck with a Hemi engine. I've both owned and leased at various times over my life - sometimes each was a better fit for the circumstance. I recently traded in a Ram that I owned for 6 years. I decided to lease my current Ram. I'm fortunate that it's not a daily driver for me, so I got an awesome deal on a low-mileage lease (7,500 /yr) of a loaded Bighorn. I put zero down, I used no trade equity, came out with a check for 17,400 and my payment is in the upper 200's. Tell me where you can drive a 52,000 truck for less than $300 a month? It was a brand new truck, not a loaner, demo, etc. (for any doubter's, I'd be happy to share my window sticker and lease agreement with you). My Ram dealer does a massive volume and every once in a while puts out incredible deals in order to meet or exceed their quota). I retired at a pretty young age from my main career and have a part-time business, but even when I was working I used a commuter rail to get to work and didn't put a lot of miles on my cars (Ram was 2012 and had 36,600 miles on it). If I held it for another few years, I'd probably have gotten only 9 or 10 for it.

Now, not many people can buy our trucks for cash - and some will even argue it's better to find a low rate loan and invest the 52k or more elsewhere but that's a whole different topic. That situation aside, I am fortunate enough to be in a good place financially and have no problem paying a little more over the course of a lease in order to have a relatively new and nearly maintenance free vehicle at all times. I don't need to replace tires, don't need to do the brakes, replace the battery or any other major repair because it's always under warranty. I don't need to do much more than change the oil. Granted, I can't make extensive or permanent modifications to it, but at this point I don't have the need or desire to. I do typically put my own wheels and tires on it, in which case I'll put the originals back on prior to turning it in. I also put on a tonneau which will be usable or sold on my next Ram.) . I use the truck for most of it's capabilities but simply replace it after 3 years.

So, when you can afford to dismiss the economics of a lease how is it "dumb"? It makes perfect sense for me.

.

 

[Mpgrimm2]

I'm not usually looking for a lease, but here's a deal we got here in SC (Mar 2017) when my wife's previous lease was done. (She only needs it for an occasional grocery getter since we take my truck on trips/my days off)

2016 Challenger Sxt v6/8spd ($24,500)
- every option except backup camera (why a v6 has paddle shifters & no camera is beyond me)

3yr lease/10k miles per yr
$3000 down & $130/mo ($7680 total)
$16,820 buy out at the end

It's a good car but we didn't plan to keep it, since she prefers a crossover/SUV seating position & cargo area for shopping. With the depreciation on purchasing the Challenger new, it was a good deal for us.

Will be looking to purchase something for her next year in the $15k-$18k range if she sticks to the plan. She was eyeballing a Nissan Kicks the other day. (Cheaper than a Cherokee)

M² Mods.

 

[gofishn]

Have no idea if this has been mentioned, or not. never negotiate on monthly payments, period, lease or purchase with cahs, no matter.

2nd, you are buying the truck for MSRP Plus or Minus. the dealer is selling the truck for MSRP, plus or minus. always negotiate on the MSRP. Period.

even on a lease, you buym dealer sells, FCA sets lease amounts an payment is what it is.

OP has done a superb job explaining most of the lease terminology and gives sound advice, other than monthly payment negotiating.

 

[Sportznut]

I am not a big proponent of leases but they make sense in some situations.

In addition to the obvious benefits a lease shows as a smaller liability (vs. a similar purchase) on one's credit report. Might be helpful when someone is anticipating applying for a mortgage or additional loans in the future.

Leases are not dumb, they are simply another option that might make sense in some situations.

Sent from my SM-N960U using Tapatalk

 

[PowrRam]

I've gone through this process with my 21 year old son in January and am going through it again as my wife's lease on her 2016 Charger AWD is expiring.

For my son we looked at Civics, Accords, Camrys, Corollas, and Elentras. In the "I can't believe what I just heard" department, we drove a Camry SE (the SE is just one tier up from the base model), which he liked, and the sales rep somehow holding his best poker face, told us the monthly payment would be $485/month. I laughed out loud at the guy. My son and I now refer to any ridiculously priced object as "being Toyota-ed".

He really wanted a Civic EX and that is what we got him. The lease numbers started out at $349/month, 12K miles, 36 months, True Zero down. We worked two dealers against each other, got them down to $293 and $290 a month and finally told the dealer we liked better we would do it TODAY at $280 a month, no more looking around. Done deal.

My wife's 2016 Charger AWD with power leather/heated/ventilated/memory seats, 8.4 Uconnect, Park Sense, push button start, etc. was a killer deal at $257/month, 10K miles, 36 months, True Zero down, plus they made the last payment on her Altima lease and made her first payment on the Charger. Sadly, there are no deals like that nowadays on Chargers, or any other vehicles. Couldn't find anything for less than $348 a month. We may end up buying the Charger. The buyout is $20,200 and she has only 27,000 miles on it.

This here is kind of funny. Just in the past week the dealer, knowing our lease is coming due, contacted us about a new Charger lease. The 2019 Charger AWD would be almost exactly equipped as our 2016 but would also have the blind spot and cross path back up detection system. The first approach was from a guy that has worked there for 17 years. Here's his offer:

If you put $2000 plus first payment and plates up front your payment would be $282 including tax.


And here is the offer I got from the sales rep that worked with me on my 2018 Ram Big Horn lease:

0 Down 36 Months is $432 for 10K miles 2K Down $383 a month for 36 months. for 10K miles

Now, the first offer is "plus first payment and plates up front" so that is about $1,100 more in addition to the $2,000 they want me to put down. But, remember, an extra $1,000 over the term of the lease is about $30 per month. So, add $30 onto his $282 per month and you get $312/month.

Summary--Two guys from the SAME DEALER gave me two different deals. One for $312 per month and one for $383 per month! Same car!

 

[Mpgrimm2]

I'm not normally a fan of leasing but wife and I have done it twice ourselves (14 dart & 16 Challenger SXT for the wife. Both at $3k down and $130/mo for 36mos). We normally negotiate on the out the door price when buying and not the monthly payment.

My 21 yr old son leased a 19 Challenger R/T w/6spd manual last month (no extras beyond base features of an RT) and the dealer was able to get another $3k off by financing through Allied vs Chrysler Capital. $3k down, $230/mo for 36 with 10k miles/yr. Just another thing to consider.
Purchased price was in the $480/mo range with same down payment.

I didn't want him to have a new car commitment that young but he walked to work a few miles away for months until he could buy the $1600 beater he had and finally got to spot where he could make regular payments on something reliable. They gotta have goals.

M² Mods.