Leasing a car can be a better deal than purchasing if done right. Follow these 6 steps to get the best lease deal ever.
- How Leases Are Calculated.
- Select the Right Vehicle and Miles Needed.
- Get Quotes by E-Mail Only, Never Drive to the Dealership Until You Have the Best Deal Negotiated.
- Know What Can and Cannot Be Negotiated.
- The 1% Rule.
- Get Everything in Writing Before You Commit to a Deal.
Important Disclaimer: If you’re currently working on paying off debt and becoming more financially stable, then leasing a car is not for you! I might add, buying a car with a loan is also not for you! The only thing you should consider right now is buying a cheap car private party with cash. Period.
However, if you’re financially stable and want a shiny new car, then leasing is by far, at least 1000 times better than purchasing with a traditional car loan IF done correctly.
1. How Leases Are Calculated
A distinct advantage you can have over 90% of consumers is knowing how a lease works. This will put you in an authoritative position when speaking with the salesman. A good dealership will give you a lease quote which clearly states most of the information listed below.
Learn the Lingo:
- MSRP (Manufacturer Suggested Retail Price): Very few vehicles are sold at MSRP in today’s market. Exceptions typically are rare limited production models.
- Invoice Price: Also known as dealer cost or amount paid to the manufacturer.
- Hold back: Amount paid to the dealer by the manufacturer for each new vehicle sold. Sometimes based on a percentage of the invoice price or MSRP.
- Money Factor: Sometimes called lease factor or lease fee. Think of this as the interest rate you will pay for renting the vehicle.
- Lease Term: Leases in today’s market range from 24 months to 48 months, with 36 months being the standard. Usually, the longer the lease duration, the less the monthly payment will be.
- Residual Value: A calculation that determines how much the vehicles will depreciate and be worth at the end of the lease. The higher the residual percentage value the lower your monthly payment will be because you’re paying for less depreciation.
- Fees: Typical fees are registration, acquisition and dealer document.
- Rebates: Rebates are offered by the manufacturer and often listed on their website as an incentive for all consumers that month or can be specific to only a certain group of eligible consumers such as veterans, teachers, employees of a company, loyalty bonus, competitor conquest and trade-in incentive (and many more).
- Capitalized Cost Reduction: A down payment or other credit that lowers the cost of a lease. Down payments can be cash and/or a rebate, trade-in allowance or other credits.
- Gross Capitalized Cost: A leased vehicle’s negotiated purchase price which accounts for taxes and any other items you put into the lease.
- Adjusted Capitalized Cost: The final amount of the lease payments calculated by subtracting the capitalized cost reduction from the gross capitalized cost.
- Mileage Overage Charge: This is a penalty you will pay if the vehicle is over the allowed miles at the lease end. Ranges from 0.10 – 0.30 per mile on average.
2. Select the Right Vehicle and Miles Needed
When searching for a vehicle to get lease quotes on, the first thing I would do is narrow down the vehicle style. Are you seeking a SUV or minivan because you have a large family? Maybe you are a college student on a budget and only need a small two door coupe? Or maybe what is most important is being green and a hybrid or electric vehicle is for you.
Once I have the vehicle type narrowed down, I would visit a website such as Edmunds or ConsumerReports. You can search by body style and vehicle type and it will list the most popular makes and models. They will be sorted anywhere from luxury to most economical to largest 3rd row seating and anywhere in between.
Next, figure out how many miles you think you will drive each year.
Best practice is to break this down by day and week with work commute and personal miles.
Mileage allowed is normally 10,000-20,000 per year. The more miles you buy upfront the higher the lease payment will be. Be sure not to buy too few miles because if you go over you will be hit with that mile overage penalty at the end of your lease. Also be sure not to buy too many because a higher amount of miles will make your monthly payment go up.
Now that we have mileage needed and a few specific makes and models in mind, it’s time to get quotes.
3. Get Quotes by E-Mail Only, Never Drive to the Dealership Until You Have the Best Deal Negotiated
I can’t stress this enough. If you want the best possible deal, do not go around driving to dealerships and sitting down with salespeople.
Because once you are there, they will most likely try to get you to commit right then and there. And you are more likely to say yes because of the shinny new car with it’s new car smell right there in front of you. Not to mention they’re trained professionals and close deals for a living.
And besides this, you have no leverage. You have no other offers on the table to compare to when you blindly walk into a dealership. Just don’t do it!
It may be wise to go for a test drive if you have never driven this vehicle.
Before getting too much further into the quoting negotiations just in case you don’t like it. A good alternative to a dealership test drive would be to ask a friend or family member if they know anyone with this vehicle. Ask them if you could test drive theirs or even take a short ride in it.
Do not bring up your trade if you have one. Get the best possible numbers on the lease first. If they ask say no trade, lease only. A vehicle trade-in can become very convoluted and make this an extremely confusing process. Once you have a few quotes narrowed down, then let them know you have a trade. Always consider private party market value before trading in to a dealer.
Zero down is the only way to go!
Many lease ads will have huge down payments needed in their fine print to achieve that low monthly payment. Let the salesman know you are not putting any money down, you want a true zero down lease. The reason for this is simple, if the vehicle is totaled, your insurance will most likely not reimburse your lease down payment.
How sad would it be to put three grand down on a lease and a week later get in an accident and now you’re out all that money and have to lease again!?
Create a new e-mail account specifically for this purpose of getting quotes, otherwise your personal e-mail will be full of junk at the end of this. Use google to search for the dealerships that carry your make and model and e-mail them asking for a quote or use their quote contact form.
E-mail, E-mail, E-mail!
I recommend getting at least three local e-mail quotes for each make and model you’re interested in. Be sure all quotes are close to the same MSRP to one another and mileage requirements and lease term length are the same. Be super specific on the vehicle and lease deal you have in mind.
The format would look something like this:
Hello,
I’m seeking a lease quote for the 2019 Infiniti Q50 Luxe RWD in Majestic White with Black Interior with an MSRP around $43,500.
I would like a 36 month lease term, 12k miles per year, all fees rolled in and a true $0 down. I have no trade and my zip code is XXXXX.
Please send me a break down of your best lease offer including the vehicle stock number and numbers described above, as well as the residual, money factor, rebates, adjusted cap cost and total due at signing.
Thank you.
– Savvy Lease Buyer
Copy and paste your message and send to at three lease dealers and then wait for the quotes.
I personally do not give out my real phone number.
But I do give them my real name and address. Be warned, if you give your number, you will be called multiple times per day for weeks on end.
Most car salesman are trained to not give specific numbers over e-mail or the phone. They will try to persuade you to come in and meet them and go for a test drive. Let them know you MAY come in if the numbers given are agreeable to you.
If they fight you on giving a lease quote over e-mail, then simply move on to a different dealership. A quick google search should yield dozens of dealerships for that make and model vehicle.
Get quotes from out of state dealerships.
Some areas of the country have better lease deals than others. This is the beauty of e-mail. Simply e-mail a few dealers from states with large metropolitan areas that are within a few hundred miles of you. You will be shocked at the price difference. This could mean the difference of thousands of dollars over the life of the lease and can also be a fun weekend road trip.
A general rule of thumb is that rural dealerships do not offer the best deals compared to large city dealers. They’re typically low volume dealers going for higher gross profit with less unit count and not going for high volume unit count with less gross profit margins like city dealers.
So if you’re going for out of state dealers, go for the ones in the large cities of that state.
In some cases you may want to extend your reach even further.
One way plane tickets are relatively cheap compared to savings you can get by going a few states away for the best deal. If you’re going across country make sure to account for those miles needed to drive back home.
Check over Step 6 in this article before buying any plane tickets, this is a risky strategy if not done correctly.
Do not let any dealer pull your credit or start a finance application until you have committed to the best deal in writing. If you’re concerned about getting approved, check your credit score somewhere online for free. If you’re above 720 you should be good to go.
For credit scores, if you’re below a 720, then work on improving your score before pursuing a car lease. This is non-negotiable. Sometimes a co-signer can be added, sometimes not. Just be careful of salesman talking you into doing a hard pull on your credit before a deal has been reached.
4. Know What Can and Cannot Be Negotiated
Hopefully a few dealerships have sent lease quotes back. Double check all the information is accurate and applies to the specific vehicle & terms you had in mind. If not, reply asking for revision or move on to other dealerships and keep going until you have at least a few local quotes and a few quotes from out of state.
Some things cannot be negotiated in a lease deal. MSRP, residual value, acquisition fee and registration/taxes cannot be negotiated.
However the following can and should be negotiated:
Capitalized Cost: This can easily be negotiated as the dealer will most likely start with a higher price than they’re willing to go. See if the dealer is willing to sell at or below invoice price into hold back. This is common place in today’s market to sell near a break even or even loss on new vehicles, so don’t feel bad asking for this!
Money Factor: Or (interest rate/rent charge) can be adjusted in some cases, every little bit helps. See what they’re willing to do to make deal.
Trade-In Value: If you have a trade, this can be tricky to do over e-mail. Use Kelley Blue Book (KBB) as a guide. If their offer is less than KBB, leverage them against the other dealers is a good way to get them to move up on price.
Rebates: Ensure you have asked about all available rebates for this vehicle and all rebates you are eligible for are included in the quote.
Lease Wear Protection: Some luxury brands include this automatically. Other brands offer it as an up-sell. Typically it will cover things like ripped upholstery, scratches on paint, wore tires, cracked windshields and more. I personally recommend buying this as the total cost for protection is usually less than four tires, so right there you’re ahead, not to mention the other benefits. Door dings WILL happen, it’s better to have piece of mind than not. And you can negotiate the price of this sometimes down to dealer cost.
Write up a response e-mail to all the dealers that sent you a quote.
I always make sure to remain friendly as there is a real human at the other end of the e-mail and you have a better chance of getting your deal if you play nice.
In your response e-mail it should be nearly the same to all the dealerships (copy & paste). Some lease hackers even go as far as to include all the salesman in one e-mail thread. This can certainly provide leverage for you but can also anger some of the salesman and they may not respond to you any further.
The response is going to vary deal by deal.
Use the information and terminology above in asking for a better price. Don’t simply say “I will pay $100/month with zero and no more!”. Salesman hate that and will probably show their buddies how dumb you sound. Doing this shows you’re uneducated, unreasonable and going to be more work than its worth to keep talking to you.
If you respond intelligently it shows you’re serious, know your stuff and will make a deal if they come close to or beat what you’re asking for.
Ask for what can be negotiated. Break it down, pick their quotes apart line by line if you need to. Remember, all this work can lead to thousands of dollars saved in your pocket at the end of this lease.
Wait for a response and repeat the cycle until you have chipped away at the monthly payment close to the 1% rule. This process can take a while, weeks in fact. Don’t settle! Hold out until you reach the 1% rule or better on your lease deal.
5. The 1% Rule
Ah yes. The almighty 1% rule. It’s simple really. The 1% rule basically states in your lease deal your monthly payment should be no higher than 1% of the MSRP with a true zero down, all taxes and fees included.
Example A: MSRP = $40,000.00, monthly payment = $40,000.00 * 1% = $400.00/MO.
Example B: MSRP = $40,000.00, monthly payment = $40,000.00 * 0.75% = $300/MO. Very unusual to get this low but could be possible if you find a “dealer demo”, a car the dealership owner or manager drove and has miles on but is deeply discounted.
And to all the naysayers, the 1% rule is possible and has been achieved by many people across the country for years.
In fact, my last lease deal I beat the 1% rule with a true zero down lease with lease protection (around $25/mo extra) and all fees included. Granted I had to fly from Arizona to LA to get the deal and drive back 6 hours.
It was worth it! I leased a $42,000 car with true zero down, lease protection included for $398/MO from an LA dealer. The Phoenix dealers wanted over $600/MO for the same car and lease with no lease protection!
That’s a total savings of $7,878.00! ($202/MO * 39 Months) all from e-mailing back and fourth. A one way plane ticket ($75) to LA , Uber ride to the dealership ($40) and a half day sunny road trip back to Phoenix.
Keep responding to the local and out of state salesman until you are at the 1% rule or lower. Once you have your golden goose narrowed down to one single dealer with the perfect vehicle at the perfect lease price it’s time to move forward.
6. Get Everything in Writing Before You Commit to a Deal
First I would ask the salesman to e-mail me pictures of the exact car I will be leasing, with VIN (Vehicle Identification Number) and window sticker.
Then I would make sure all the figures are correct, call the salesman and go over everything line by line. This is especially important if you’re going out of state to get this car. You don’t want any surprises if you’re flying or traveling hundreds of miles to get there.
Have the salesman e-mail you a signed copy from him/her and their manager stating the figures will not change if you come in.
Ask if you can put a refundable deposit down on the vehicle to hold it until you get there.
Keyword being REFUNDABLE, as you are not putting a cent down on this lease deal.
The worst thing would be to get there and find out someone else is buying your golden goose. If they aren’t willing to take a deposit then it may be a deal breaker depending how far you’re going travel to get there. Let them know these are your terms, most sales manager will make an exception for out of town buyers.
If you’re lucky enough to find a local dealer willing to play ball, most of them have shuttles that will pick you up.
At this point you’re nearing the end of your long journey to the 1% lease deal. In an effort to save time it would be wise to fill out the credit application online a day or two before going in to sign the lease. This way everything should be done in the way of paperwork before you get there.
Once you arrive, go for a test drive!
Make sure to inspect the vehicle for damage. Check the VIN, window sticker and odometer to ensure it all matches.
In the finance office, I would bring with a printed copy of the signed quote you and the salesman agreed on. This way there is no question what the numbers are.
And if the salesman and finance person treated you well, give them a 5 star review. It really helps them out in ways you do not even know and shows you appreciate them working with you to get such a great deal.
If you found this article helpful please share it on your favorite social media site and let us know in the comments. If you have successfully gotten a 1% lease deal post your story below in the comments for others to hear!
Good luck!
