What Part Of A Lease Is Negotiable?
In a lease contract, factors like interest rates and taxes are components that are rather fixed, i.e. they cannot be altered at will. Market conditions or government laws can bring about changes in these variables, which then have to be used in every lease calculation.
What really is negotiable in this financing option is the Capitalized Cost, Term and Money Factor; all of which have been defined above. The Capitalized Cost can be bargained for, while you shop around for the best and lowest possible price you have to pay for the vehicle. Remember, when the capitalized cost changes, the lease price will change automatically.
The term is often considered partially negotiable because while different lease durations (starting from 36 months) are set by the leasing company, you can pick from these choices at will. Do not let the dealer lure you into any specific term. Think about your preferences for low monthly payments or quicker ownership at the end, before making a decision.
If you cut out the dealer from the equation and arrange a lease for yourself, the money factor can be reduced. In such a case, shop for a money factor that is being given out the most by lenders. On the other hand, if you go to a dealer, make sure you break down the money factor amount. This amount should be broken down into what is actually being charged and what the dealer is taking up as his own profit.
Moreover, if you contact a leasing company directly, another aspect of a lease that can be negotiated or at least chosen by you is the Residual Value. For two cars with similar Cap Cost and Term but a different residual value, the lease payments can vary greatly. Those who have no plans of buying the car at the end can opt for one that has a higher residual value so their monthly payments are less. Those who would want ownership at the end can opt for a vehicle with a low residual value.
Do You Have The Best Deal?
Let’s assume you have done all your homework regarding the leasing options. This includes the terms and conditions and the best and most competitive pay rates. How do you know you have found the best deal amongst a hundred others that seemed equally appealing?
As mentioned before, no two deals can take preference over another because the customers for each, have a different mindset and varying needs. Therefore, there is no such thing as the ‘best’ standard deal for one and all. However, because leasing is a competitive business, the term Best Deal becomes a sign of success for leasing companies and customers alike.
The easiest way to benchmark the best deal is to look around at what other lessee’s have. This means comparing the price and conditions you get out of a leasing contract along with those that other lessees are fulfilling. Looking at a list of lease assumptions is the best way to do this comparison. A look at what others are selling to ‘get rid’ can give you an idea of what is acceptable as the ‘best.’
Moreover, along with surveying the market, you can also consult friends, family members and acquaintances in the industry about the leasing agreement that you have finalized. Ask them whether any changes should be called for. Sources such as Classifieds, eBay auctions and Car Lease Canada itself, are some of the most reliable and easy-to-access information hubs in this regard.