Car-Leasing Secrets Every Lessee Should Know

Leasing a car is not an easy thing for a novice. To get the best deal, you need to do lots of research and know how the industry works. Research shows that dealers make more money by increasing car prices when selling to unsuspecting customers.

The more you know, the higher your chances of walking away with a good deal. Let’s look at four car-leasing secrets that can help lessees save money on a car lease.

1. One-Pay Lease Saves You More

Paying for a car lease in a lump sum is a clever way to save money than paying monthly. Many lessors are quick to offer low rates for upfront lease payments. There are two ways to do it—offer to pay the entire amount using cash or trade-in a car whose value is the same as that of the new lease.

The lessor will give you a refund or ask for a cash top-up based on the difference between the trade-in car’s value and the one-time lease payment. A one-pay lease is a great option for a lessee with a low or no credit score. It allows for quick approval.

1. You Can Negotiate the Lease Amount

Many people are quick to bargain when buying a car but will not do it when leasing. The low monthly payments make them overlook important factors that could lower the leasing costs. Unbeknownst to them, dealers make more money on car leases by quoting higher prices—just like they do when selling cars. 

Negotiate the lease amount just like you would when buying a car. Otherwise, the dealer will have the upper hand and charge you more. And remember, when the dealer wins, you lose.

1. A Large Down Payment Lowers Your Monthly Interest

Not all leasing companies accept down payments, and those that do may limit how much you can pay. The most important thing is to understand how the lease down payment or cap cost reduction works. You can use a car lease calculator to determine how much you’ll pay per month after the down payment.

Generally, the leasing company will offer you rebates and incentives based on the down payment. For instance, if you pay $6,000, your cap cost reduction may be $9,000. This reduces the monthly payments. However, to get a rebate or incentive, you may have to pay the maximum down payment limit.

1. Dealerships Don’t Lease Cars

Most first-time lessees are unaware that dealers don’t lease cars. Their key responsibility is to arrange leases on behalf of financial institutions such as banks. Once a lease contract is signed, the finance company buys the car and assumes ownership. The lease arrangement exists between the lessee and the finance company. 

Lessees need to know that the dealer can only reduce the lease price. Other things such as the residual value, money factor, disposition, and acquisition fees are all set by the lease finance company. When negotiating, lessees should focus more on the dealer-controlled charges like the prep fee, warranties, insurance products, and doc fees. These are often manipulated by dealers.