Leasing cars is more popular than ever, for good reason, but it can be tricky. Check out these common mistaken notions so you can get the best deal.
Car shoppers leased 2.2 million vehicles in the first half of this year, more than in any first half in history, according to a report by Edmunds.com. That’s a 13 percent increase over the first half of 2015 and double what the number was in 2011. It’s a trend led by millennials and seniors age 75 and older, with drivers of other ages jumping in now as well.
But just as there is an art to buying a car, leasing one requires a bit of extra know-how to ensure you get the best possible deal. Don’t fall for these myths about leasing:
Myth No. 1: You should ask the dealer what cars you can lease
If you do that, dealers will steer you to cars they want to clear off their lots. Choose exactly what car you want to lease. All models should be fair game. (if someone says one isn’t, they’re likely bluffing. Ask to speak to the sales manager.) Then decide every detail about the car you want to lease including color, interior and extras.
Myth No. 2: You should tell the salesperson up front that you want to lease
This is debatable, but most experts say not to mention leasing. All sales are negotiations so it’s always a good idea to remain somewhat of a mystery to the seller. When you go to the dealership, you want to approach the deal just as if you were buying the car, advises The Wall Street Journal. In fact, don’t mention you want to lease until after you negotiate a purchase price.
Myth No. 3: Leasing negotiations are the same as those to buy
That’s not true because there are many variables that go into a car lease including miles driven annually, depreciation and other variables. Once you have negotiated a purchase price on a car, return home and calculate your lease price. The best way to determine what you’ll pay is to call the finance manager at the local dealership and ask for the “three-year residual value” of the car you want (for a typical lease term of three years.) Don’t be bashful. They’re accustomed to such questions. Then take that amount and the purchase price you negotiated to begin to calculate your probable lease price. Edmunds has a lease calculator that allows you to factor in mileage, down payment, trade-in and other variables.
Myth No. 4: You’ll get the best deal talking to the salesperson
Maybe. But maybe not. You should check online for lease deals. You’ll find them on the car manufacturers’ and dealers’ sites. It’s like having a coupon at a retail store. It’s nice if the salesperson tells you there is one, but what if they don’t?
Myth No. 5: The monthly payment is what’s important
Wrong. So wrong, in fact, that Marc Frons, writing for The New York Times, called focusing on the monthly payment a “major misstep” when he leased. “Focusing on the monthly payment, I learned too late, is the equivalent of only knowing your monthly mortgage payment without knowing the interest rate or how much you were even borrowing,” Frons wrote. Insist on the total price of leasing the car.
Myth No. 6: Lease price includes all fees
Not usually. When you settle on a lease price make sure that it includes all fees. Frons wrote about the fees he unwittingly agreed to pay including a $395 “disposition fee,” which he was required to pay if he turned in the car without leasing another. If he wanted to buy the car when the lease ended, he needed to pay a $300 “purchase options fee.” He also paid an array of smaller fees including a $12.50 tire free. The best way to make sure you don’t pay these fees is to take your time during the deal. Don’t go when you’re rushed.
Myth No. 7: All dealers will offer the same lease price
Dealers compete for leases just as they do for sales. Let dealers vie for your business. Consult at least three dealerships’ internet sales departments before you commit to a lease. Don’t be shy about telling them what price you’re willing to pay. Also, let them know you are talking to other dealers. And again, make sure all fees are included in your final agreed upon price.
What’s your experience leasing cars. Is it appealing to lease instead of buying a new car? Share your thoughts in comments below or on our Facebook page.