The price of a car is negotiable, whether you’re leasing or buying one. Asking for a better deal is a part of the process, but take note that a lower price depends on several factors.
Time is money.
If you feel like negotiating is a waste of time, remember that the lower the overall price, the lower the price of your lease. A rule of thumb is to get a model with a high resale value, which simply means many people would want to buy it or lease it when you’re done with it. Browsing a used-car pricing guide can help you understand which vehicles are considered by a majority of consumers as “valuable”. A financial institution or a loaning entity can also help you determine the residual value of a vehicle.
Some references contain all the information you need, such as automobile magazines where you can find estimates on cars. You will also find several sources that will discuss how much residual value to expect from a particular car brand or model after a few months. It all starts with knowing the original selling price, after which you can do some research. This research is important because any negotiating on your part will be based on what you know about your car’s retail price and residual value. You can also base your choice of vehicle on your research. Do not lease cars with low or very low residual value. The lease terms are more likely to increase if the car has low or very low residual value. Remember, the leasing entity will get back the car from you and may sell it or lease it again to another individual.
Where else to do your research? Looking at car advertisements can also help you figure out which vehicle models are used by many consumers and which ones are in high demand. Some manufacturers subvent leases, which means they are absorbing the cost partially by artificially bloating the residual value of vehicles. Consumers who saw the figures chose the vehicles being promoted by the manufacturer. This advertising tactic was detrimental to most manufacturers. Yet, many ads often showcase deals that will attract more consumers. Interest rates are usually lowered to catch the attention of the customers.
Read the fine print. Always.
When you sign the lease agreement, ask questions about items on the page that you do not understand. There are federal regulatory bodies that require manufacturers and lease companies to disclose crucial facts that customers will want to know. Some of these items are in the fine print. Some examples are the rate of interest, downpayment fees, capitalized cost residual value of the car, taxes, and depreciation value. Watch out for acquisition fee, and also disposition fee; these fees typically range from $250 to $450 and $300 or $400, respectively. You should also read the part about possibly buying your leased vehicle when the lease expires.
What about “excessive” car damage at lease end?
Does the leasing company have a scale bar for damages on leased vehicles? Most of the time, the lease contract will specify what “excessive” means, which is why you should always read the fine print. Defining this clause is important if you want to understand later why you’re being assessed for penalty fees.
You may be able to get asset protection because this means extra insurance coverage. Not many states require this insurance policy component, but if your car gets stolen or damaged, you can offset the cost of the lease (yes, you still need to pay the lease until expiration). The insuring company will help you pay for the remainder of your lease. This coverage is not a requirement, but you’ll feel safer with this insurance option present.
No permanent customization.
Remember that customizing your vehicle, i.e., repainting, installing fixtures, etc., is not allowed. If you’re leasing a car, the company providing the lease will demand that the car is returned in its original state. Some prohibited customizations include accessories. You cannot attach a trailer to your vehicle, and you cannot add a vinyl top. However, customizations may be allowed, as some leasing companies have rules on what types of changes are allowed.
Thinking of what else you should pay for?
Remember that sales tax, registration of your car annually, and all taxes are on you. You should also set aside some cash for maintaining the car and for insurance coverage. Most of these things are in the contract, so read it carefully. If these things are not mentioned, always ask. Your dealer will be able to tell you if the monthly payments include such fees and which items you should obtain independently (like insurance). There’s nothing worse than agreeing on a deal and finding out later that some hidden or extra fees are being charged.
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