How to Negotiate at the End of Your Car Leaseby Lily Welsh
The end of your car lease may just be the perfect time to land a deal. Buying the car can be a solution if you have exceeded your lease mileage allotment or if the car has excessive wear and tear and you want to avoid fees. Also, the leasing company may be eager to sell the car to avoid taking a loss on selling it used or wholesale. The company's eagerness could help you save money. You will need to negotiate with your leasing company to get the best deal for your car.
Find the residual price of your car and the purchase-option price in your leasing contract. The residual price is what the company considers to be the value of your car at the end of the lease. This price is the starting point price for selling the car to you at the end of the lease. The purchase-option price is the additional fee for you opting to buy the car when the lease ends.
Research the market value of your car using auto pricing guides like Kelley Blue Book or Edmunds (see Resources). Compare the market value to the residual value to determine how fair the residual price is for the car. Note that according to Bankrate, the residual price on leased cars is almost always higher than the market value for the car. Knowledge of the car's actual value will help you during your negotiations and will help you come up with a ceiling price you are willing to pay.
Shop around for auto loans if you plan to finance the car rather than pay it off in a single payment. Get a few loan quotes, but don't ask your current leasing company for a quote if it does financing. You will use the information you've gathered about loans as a negotiation tool.
Wait for a call. Your leasing company will call you in advance of your lease expiration to ask whether you plan to turn in the car or purchase it. Although you can make the first move and call your leasing company to begin negotiations, Bankrate suggests waiting for the company to call you so that you have the upper hand.
Make an offer. Let the company know you are willing to walk away from the car, especially if there is a large gap between the residual price and the car value. Some financial institutions refuse to negotiate residual prices as a rule, so an offer for less than that might be automatically rejected, but it never hurts to try. If the company counter-offers, you can do the same. Repeat the process until you get a price you like.
Request a purchase-option fee waiver or reduction. According to Bankrate, this fee is the most negotiable part of a lease end buyout, so use your willingness to walk away from the car as incentive for the company to waive this fee for you.
Negotiate a favorable loan term if financing. Armed with your information from other lenders, reveal your best offer and ask the company to beat it.
- check If you have exceeded your mileage or damaged the car, don't reveal it during negotiations. Then the leasing company will know that you have incentive to purchase the car and can be less flexible.
- check Your willingness to turn in the car rather than buy it is your best bargaining chip, so even if you plan to buy the car no matter what, act as though you will walk away.
- photo_camera Luxury Car sportscar from my luxury car series image by alma_sacra from Fotolia.com