Thursday, June 02, 2005

Here is a secret most car dealers don’t want you to know…

You can negotiate a better lease deal!

Car leases are designed to offer you a monthly price point that you will readily accept and eliminate the price discounting that makes people dread the new car purchase experience.

A great for the dealer but, it costs you.

Negotiating a better lease rate is possible but takes more factors into consideration than an outright purchase.

By understanding how a car lease is structured, you can negotiate a more favorable lease that will save you thousands of dollars.

Variables in a car lease:

1) Initial value of the vehicle to be leased - this should be the same as the price you are willing to pay if you bought the vehicle outright and include dealer discounts from the factory.

2) Interest rate – this is the cost of money…are you getting the lowest interest rate?

3) Residual Value – this is the “buyout” value at the end of the lease. Often times, leases are structured with a high residual while the market price for a similar vehicle at the end of lease can be less than negotiated residual.

4) Mileage – The lease is based on an agreed to number of miles over the term of the lease. Less expensive leases tend to have a mileage allowance that is lower than what the average person drives in a year. If you go over the agreed to limit, you pay a penalty that quickly adds to the total lease cost.

5) Down Payments and dealer preparation charges – To lower the monthly price of the lease, many deals are structured with non-refundable down payments. Sure it gets you into the car but, this is money that is gone, and if you want out of your lease in the future, you will never see it again. Look into a $0 down lease.

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