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Author: admin | Category: Lease Car Calculator | Date: 03.11.2014

Negotiating a car lease is different than negotiating car price, but the starting point is the same. The residual value is the established price of the car at the end of the lease, and it reflects the amount of depreciation over the term of the lease.
The money factor equates to the interest rate on a loan, and is used to determine the monthly payment for the lease.
The term of the lease is the number of months, or payments, you will make for the duration of the contract. When negotiating a car lease, mileage is one variable that can be used by the dealer to lower the payment. Dealers and auto manufacturers love to advertise leases because the payments are attractive and they pique consumers’ interest.
To determine if a car lease is a good deal, compare it to a 60-month loan at an average interest rate. Certain specifications, prices and equipment data have been provided under license from Chrome Data Solutions ("Chrome Data").
You need to agree on the price of the vehicle before addressing any other elements of the deal. This is the same thing as the purchase price if you were buying the car with cash or financing it with a loan from a bank.
To get a better idea of what the lease actually costs per month, divide the capitalized cost reduction by the number of months the car will be leased, and add the result to the monthly payment.

When negotiating a car lease, you can determine if the money factor is reasonable by multiplying it by 24. However, it is unwise to sign a lease containing unrealistic mileage restrictions, because if you drive the car farther than the total mileage cap, you will pay a penalty for each mile traveled beyond the cap when you return the car. However, you must always examine the fine print, and you should also compare payments, terms, and conditions between different dealers and with what is promoted on the car company’s website.
A subsidized lease is one for which the terms of the contract are subsidized in some way by the auto manufacturer to make the monthly payment and other terms irresistible. Before we get into specifics, it is important to understand how car leasing works before attempting to negotiate a car lease.
When negotiating a car lease, it is important to remember that the capitalized cost is negotiable and that you should use the same process to determine a fair price as you would if you were buying the car.
Note that if you are trading your old car in, the value of the old car should be applied to the lease in the form of a capitalized cost reduction if the dealer is not paying you directly for the trade-in vehicle. Only a closed-end lease establishes a residual value, and you should only consider closed-end leases for this reason.
If the result is higher than the annual percentage rate for a 60-month car loan, you should negotiate the car lease down. When negotiating a car lease, be sure to explore how variance in the term can impact the monthly payment. If different dealers and the auto company are all promoting the exact same payments, terms, and conditions for a specific year, make and model, you have found a subsidized lease deal and there is unlikely to be room for negotiating the car lease.

When negotiating a car lease, you should try to increase the residual value as much as possible to reduce your monthly payment. If you take out a 60-month loan at five percent interest and put $2,000 down on the car after negotiating the purchase price to $26,000, your monthly payment is about $475. However, when you find variances in the terms and conditions between different dealers, and between dealers and what the manufacturer is promoting, then you know that you have room to negotiate the car lease. A company called Automotive Lease Guide (ALG) rates vehicles by depreciation rate, and those models with low depreciation rates usually provide the best value when leasing.
In this case, the lease represents an excellent deal, one that is likely subsidized by the auto manufacturer and which offers little room to negotiate the car lease. If you do not adhere to the restrictions outlined in your lease contract, you can face steep financial penalties at the end of the lease. When negotiating a car lease, it is possible to adjust some of these variables to better fit the way you live.

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