MoneyWisdom Blog

Negotiating a Lease in Six Easy Steps

Posted by Hanscom Federal Credit Union on Mar 9, 2015 11:57:00 AM

Negotiate_a_LeaseMeet Tom. He lives in Boston and rides the T to work - he can walk or ride his bike almost anywhere else he needs to go. He’s just been offered a great job opportunity - a 2-year placement outside the city - and he’s going to need a car. Since it’s temporary, leasing a car makes the most financial sense.

Tom has never leased a car before so he’s a little unsure how to approach it.

No problem! We’ve got some great tips on how best to negotiate your lease, starting with figuring out what you can afford.

  1.      Start by taking a good look at your budget to determine what you can afford to pay monthly. Don’t forget to include the cost of insurance. (Most insurance carriers can give you a basic list of cars and their approximate cost to insure.) Plan to spend no more than 20% of your take-home pay on all your car-related expenses.
  2.      Pick a couple of dealerships to visit and choose the model, color, and options you want on two or three cars in your price range. Be on the lookout for models with good safety features and low insurance premiums. Only consider cars that are on the lot and take each for a test drive. Don’t tell the salesperson you’re interested in leasing.
  3.      Get on the internet and go to Consumer Reports’ Car Pricing Service. For just $14, find out how much the car you’re interested in costs the dealer. The report will also show you how much room there is to negotiate.
  4.      Return to the dealership and negotiate the purchase price of the vehicle, starting with the actual cost to the dealer (see #3 above). Only after this negotiation is completed should you tell the dealer you’d like to lease the car. Your monthly payments will be based on the final price you agree to - somewhere between the cost to the dealer and the suggested retail price shown on the window sticker.
  5.      Ask the dealer to put all the costs and fees associated with leasing the car in writing so  you can go over them to make sure they’re fair. (See“Leasing Fees for Dummies” for help in deciphering all the fees.) Feel free to ask the dealer to explain what each one is. Take a close look at the figure for the Capitalized Cost Reduction. It should be zero if you aren’t putting any money down.
  6.      If you’re not happy or comfortable with the deal they’re offering - WALK OUT! In fact, plan to leave and return in a day or two - it may give you a little more bargaining power. Don’t be in a hurry to sign the contract, because you’re more likely to agree to a deal that, well, may not be ideal.

Following these steps should help you negotiate a good deal on a lease. Just remember to be patient, detail-oriented and firm.

Once you’ve signed on the dotted line, be sure to make your payments on time, watch your mileage and most of all, enjoy your new car!

Got any lease-negotiating tips to share? Please let us know in the comments section below!


Topics: Cars

Lisa_Taylor_PhelpsContributed by Lisa Phelps

Lisa Taylor Phelps is a nationally known writer and blogger specializing in educational content in personal finance and money management.   For 10 years she worked with credit unions all across the country as a Project Manager at iDiz Inc.  She’s been an active blogger in the credit union community for over 5 years, writing for

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