Many consumers are afraid, or even ashamed, to request discounts on goods or services. When it comes to leasing a vehicle however, negotiation is imperative for ensuring a deal that is good value for money.
Those who overpay for their lease could see their total monthly payments equate up to 75% of the retail price for their selected vehicle in brand new condition. This is significant because those choosing to lease a vehicle will never actually own it (unless, of course, they choose to buy said vehicle at the end of the contract).
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To ensure you don’t fall victim to a grossly overpriced lease, take note of the following five negotiation tips.
Tip #1: Be aware of the leasing costs which are often inflated
The administration fee, and the penalty charge for every mile exceeding the agreed mileage, are two examples of costs which are often inflated by contract hire companies for higher profit margins – they are often not 100% absolute!
Additionally, the ‘as new’ value of a car may also be exaggerated by a dealership, to make their deals seem better than they actually are, and to ensure maximum return.
For example, imagine a dealership is charging £450 x 48 months for a lease – this totals £21,600.
Obviously, this isn’t fantastic value if the car of interest can be bought brand new for £25,000! The dealership might tell you the going price of the car is £27,000 however, to make the ‘deal’ more appealing. Even if you negotiated this monthly fee to be reduced nominally, to £415 for 48 months (totalling £19,920), the leasing option wouldn’t seem as exploitative.
IMPORTANT: Ensure you research the ‘as new’ retail prices of vehicles you are interested in leasing, to help determine the overall value of a deal.
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Tip #2: If possible, offer a large down payment
Providing a large down payment for a lease can often (but not always) see you save a significant sum. While in some cases, a deal may only appear cheaper due to smaller monthly payments exchanged for your sizeable lump sum, many dealerships will offer reduced monthly payments AND an additional discount as a token of thanks.
A lease down payment usually equates 15-20% of the vehicle’s ‘as new’ retail value. Offering a higher down payment means more of the car is paid for in advance, meaning reduced risk for the leasing company. This is why some dealerships will grant an additional discount in exchange for a greater down payment.
Tip #3: Visit prospective lease dealerships in person
If at all possible, you should visit prospective dealerships in the flesh. This will help to ensure your budget requirements for, and the terms and conditions of, your potential lease are fully understood by both parties.
Leasing a car through the internet (without any time-consuming, cost-negotiating emails sent back-and-forth) will see you pay the exact figures quoted online. It is better to haggle in person, for the salesperson involved will be able to see any hesitation you have (even if feigned) and will likely apply more discounts, or complimentary add-ons (breakdown cover, for example), to ‘sweeten the deal’.
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Tip #4: Conduct competitor research and record rival figures on paper
If you have already decided what make and model of van or car you’d like to lease, you should conduct some research to find out the different costs quoted by a variety of dealerships.
Be sure to not only note the costs of vehicles ‘as new’ and monthly payments, but other potential fees too (cost per mile over the agreed limit, late payment fees and the vehicle disposition charge, etc.).
If you’re not yet interested in a specific make and model of vehicle, you can still conduct comparative price research for the sort of car you require. You could investigate lease prices for family friendly hatchbacks, or sportscars, for example.
Taking your notes to the dealership will aid your ability to negotiate, firstly because you won’t be in any danger of forgetting the figures quoted by rival contract hire companies, strengthening your request for a better deal. Secondly, the salesperson will be able to see that you have explored what is offered by competitors, and so will be particularly wary of the risk of you taking your business elsewhere.
Tip #5: Haggle confidently – but be realistic!
Now that this article has equipped you with helpful knowledge for negotiating a better lease deal, you may be inspired to head straight to your nearest dealership to demand a significant discount. However, it is important to be realistic – dealerships do need to make some profit to survive!
Although rare, some salespeople may sternly tell you that their prices are in no way negotiable. Should this situation arise, remain polite and thank them for their time before visiting other contract hire firms – one is certain to seriously consider your cost preferences in order to secure your business.
NEVER be pressured into signing on the dotted line for any deal you feel does not meet your financial, or leasing, needs. For more tips see “What Does it Cost to Lease a Car?” by Lease Your Next Car.