How do you shop for auto lease rates?

Moses · 12-12-2006, 10:26 AM

My wifes new car will arrive in a week or two. I'm going to lease it. My first instinct is that it's probably a bad idea to let the dealership set up your lease. Any ideas from those who have shopped leases? (I'm new to this!)

sammyg2 · 12-12-2006, 10:42 AM

First thing I do is call up the credit union.
I've found in past experience that they are usually very hard to beat.
Same goes for extended warranties which are usually a rip off, not so if you get one through the credit union. Last time it cost 1/4 as much as the dealer wanted, and the one from the credit union had better coverage.

Moses · 12-12-2006, 10:46 AM

I don't have a credit union.

the · 12-12-2006, 10:51 AM

I've never leased a car, but my buddy just did so I learned a bit about it.

I don't think there's anything wrong with having the dealer set up the lease. All that matters is the lease rate. And that is a negotiated number. Whether you get that number from the dealer or someone else, it doesn't matter.

Basically, they use the lease rate to alter the price of the car. It's just another component of the cost, just like the window sticker. They can discount the car $10,000, but bump the lease rate to make it up, or vice versa. They are just 2 sides of the same coin.

For instance, he leased a new car that has just come out and is in demand. Some dealers said they would lease it "at MSRP," suggeting there was no markup. But then they'd bump up their lease rate to make up for it. So in the end it was the same as padding the MSRP.

Also, just like the sticker price, the lease rate reflects market conditions. For example, on a hot car, they will bump the rate to take more profit on it. On a slow selling car, they will decrease it below their cost to take a loss but move the car. You need to find out what their cost is. It will be the same from dealer to dealer. They will simply tell you and show you, if you ask them.

Then you need to find what the market is. Are they generally being marked up? Down? Passed along at cost?

So, those are the 2 components you need to negotiate: Sticker price and lease rate.

RKC · 12-12-2006, 11:04 AM

Make sure you only deal with the final cost of the car and not the monthly payments. Check out Consumer Reports or Automobile Magazines leasing guide for more info on all the details. There are some good websites too - some will give residuals on whatever car you're looking at.

And remember if you or your wife own your own business, you can deduct business mileage and almost certainly make a lease a way better deal than an outright purchase.

the · 12-12-2006, 11:14 AM

you can deduct business mileage even if you own the car.

Moses · 12-12-2006, 11:17 AM

The price of the car has been determined. Now I need to decide if I want to buy or lease. I will likely lease. Is there a website that lists current lease rates?

RKC · 12-12-2006, 11:19 AM

Yes, sorry, you can deduct mileage - but you can also deduct the percetange of use off the lease payments - so if you spend $7000 on the lease and use it 50% for business, you can write off $3500 - what the actual savings works out to depends upon your rate.

the · 12-12-2006, 11:20 AM

if you own a car that is used in business and have payments on it, you can deduct the payment.

if you own it outright, you can deduct the depreciation on it.

you are always going to get a tax benefit for any car that is used in business, whether it is leased, on payments or outright. you just use different parts of the tax code.

RKC · 12-12-2006, 11:25 AM

You can get residual values on cars.com

RKC · 12-12-2006, 11:27 AM

Well, I'm no tax accountant (obviously!) but I thought the difference was that you (as an individual) could deduct the payments on a lease if you own a small business, but that you would have to buy the car THROUGH the small company to do something similar. Is this false?

stomachmonkey · 12-12-2006, 11:45 AM

Don't pay full price for options/add ons.

Say you get a DVD or Nav installed. Amortize the cost over 4 years then only pay the portion that coincides with the lease term.

$800 install for a 2 year lease term ='s $400 cost to you.

Steve Carlton · 12-12-2006, 12:46 PM

I don't know of any banks you can go to directly to finance the car as a lease. There are a few independent leasing companies that can do it if the dealer will sell the car to them (don't count on it).

Hopefully, you're dealing with a manager at the dealership who has the authority to negotiate the lease terms. In essence, all you're looking for is the best rate and residual. Favor rate over residual, as that's real savings. Your only leverage over them at this point is to finance the car (anywhere you like), pay cash, give them a good survey, or not buy it at all instead of leasing it.

I'll send you a PM if you want to call me and I would be happy to help you out. It really gets quite involved trying to explain it blind.

sammyg2 · 12-12-2006, 01:01 PM

If you have a credit union near you, chances are you have a credit union. Lots of em are open to anyone who wants to do business with them.
You go in, sign up and open an account and deposit $100 or so, and now you are a preferred customer and will usually get treated like a king.
Discounted interest rates, an honest person who will tell you what a good deal is and not lie to you about it, etc.

In many cases they are the bank of the bizzaro world. The anti-bank.

Chilling in VT · 12-12-2006, 01:16 PM

I would get a rate from the dealer/manufacturer first and then get a rate from Chase. We have generally had better luck at lease end with Chase in negotiating the final buyout (not the same as the lease end price in the lease). I am not sure of any other leasing companies out there. Good luck.

Gene Wilkes · 12-12-2006, 01:43 PM

Typically the best lease deals are nationally advertised in news print w/full page ads and usually hard to beat! They are not specific to a dealer or dealership but promote the car line!