Topic: How to negociate on a lease?

[Froggy]

Hi everybody,
You don't to worry about me, I don't have a blonde GF
I am currently looking at buying or leasing a new car. Being from europe, I've had very little exposure to the "leasing" concept as most people out there finance their cars (or at least used to). As you guys and gals seem to have a lot of experience, I need your input on how to negociate the best lease on a car, as to whether you concentrate on lowering the MRSP, getting the residual up, get the best interest rate, etc...
What do you have to focus on, and in which order?
For information, the car I am looking at is the Saab 9.2X Aero and I would rather lease it as I am concerned about the resale value of such a car in 3 or 4 years.  
The other car I am considering is the S40 T5 AWD but in that case I would finance it.
Anyway, I'd probably keep the car for only 3 or 4 years as I'd (hopefully) buy the new 330i when it has been "debugged".
Thanks for your help and time,
Alban

[wing]

Well Froggy, first thing to negotiate on is the selling price.  Most leases are pretty well set for interest rate and residual based on KMs.  You also have to determine number of Km's you travel per year, most leases give you 20k a year.

So first thing, negotiate on selling price, than see  if they can move on residual or lear rate and free KM's and such.

It seems like you understand it (Based on your residual question)  In the lease you are paying for the depreciation of the car plus taxes and interest on the entire amount.  

[Froggy]

Thanks Jamesbe, that is what I thought.
Nonetheless, if you get the selling price down, what prevents them from lowering the residual value, even if it is a double edged sword as you may be tempted to buy out the car after...
And are interest rates not negotiable (at least for leases)?
What are the hidden costs involved in leasing?
Sorry for all the questions but I read that story from the Edmunds journalist working as a car salesman in an other thread and it kind of freaked me out....

[S60]

The only time the residual would change is if you  
add extra km's per year, which of course devalues the car.
As far as the lease rates, you have a choice of which financial company you prefer to deal with, and (correct me if I'm wrong) your credit rating.

Hidden costs could be many factors, this is where you must read all the terms in the lease contract, and make sure you understand all charges.If you do not get your questions answered to your satisfaction, head for the exit door.

(Message edited by S60 on December 08, 2004)

[Froggy]

So, S60, can you deal directly with your bank? (I assume they only do financing as they may want not be the owner of a car which would a pretty bad asset for them, no?)
You don't necessarly have to go through the dealer's leasing company?
Thanks for all the info, I think I have a clearer picture of the whole deal in my head!

[ovr50]

It's been my experience that most leases allow 24 or 25KMs/year. All my recent leases have been at these levels. Just a minor point; but can get expensive if you plan on handing the car back at lease end and you're over on annual kms.

[S60]

In Canada, the Bank Act precludes Banks from leasing passenger cars or light trucks.

Most automobile dealers have access to the manufacturers "captive" (in-house) leasing subsidiaries like General Motors Acceptance Corporation (GMAC) and Ford Motor Credit Corporation (FMCC). The dealer sells the car to the leasing company which then leases it to the customer. Shop around to get an idea what kind of rates are out there.

[Froggy]

Thanks a lot guys, I guess I'll go "push the button" at a Saab dealer to see if I can actually win the car!!
No seriously, I'll go around to see what is availble on the market right now.
I like the 9.2X because it basically is a cushier WRX and I don't think Saab is moving a huge number out of the showroom as I still have to see one in Ottawa, so there should be some incentive coming soon and good deals to be done, I assume.
I don't think I'd keep it more than 4 years anyway and I am concerned about the resale value as I stated earlier. Ergo, leasing looked like a viable option.

[S60]

Lets us know how the 9-2x works out.
FYI, An associate of mine leases thru GMCC and has had very good experiences, no complaints whatsoever.

[Sterling]

The only things that a dealership can negotiate are the price and to some degree the interest rate. Most lease companies allow the dealership to mark-up the interest rate by 1-2%. For example, if Ford Credit offers a rate of 3.9%, a dealership could use a rate of up to 4.9%. They have no option to go lower than 3.9% though. Residuals and mileage charges are set by the leasing company and are not negotiable.

[Triple_b]

In my experience dealing with Nissan, the dealer offered the identical interest rate and residuals that Nissan showed on their website.  No negotiation there.

I only negotiated monthly payment, since that is what the dealer seemed to want to do.  It didn't matter to me, since I knew what monthly payment equalled what selling price, since all the other factors (lease rate, $ down, months, residual) were constant.  I'm know you can negotiate selling price too, whatever you are comfortable with.  The key is to be prepared so you know what you are really paying.

One thing to keep an eye on is changing interest rates though...they can change from month to month, and even a 1% difference can make a big chnage in monthly payment.  I saved about $20 a month by taking delivery in October rather than November (when the lease rate went up 0.7%).

[Froggy]

Thanks for the info.
Triple_b, you say you "saved" 0.7 % by taking delivery earlier, but isn't the lease rate stated in the contract you sign? When is the best "season", other than trying to buy or lease when new models are out ? (a really popular question, isn't it?)

[kavatski]

He means the leasing company's interest rate on the lease for the vehicle he chose went up the month after he signed the contract and took delivery, so his monthly payments were lower than they would have been if he'd waited. You play the same game with financing a purchase. Could be the interest rate available at the time you buy is the best it's going to be all year; could be it goes down the next month.

I've already seen special leasing and pricing for the 9-2X advertised in the paper, so I'd agree that it's probably a good vehicle to try and get a deal on.

[Froggy]

Like playing the market....
Bmorton, do you can remember what was the rate you saw on the paper? The only one I saw was on the US website (Us$199+Tax for 36 months for the Linear trim).
Thanks

[safristi]

Froggy do you wear two belts,suspenders and support hose...Freedom Cries!!fer a lil profit margin...remember the old lab test...put a froggy in cold water and keep upping the temperature he stays PUT and LOSES it ALL....hmmm yummy legs..pass the Fava beans.. are you sure your'e NOT from Aberdeen ANGUS(cheap-bastard capitol of the World???)...
 

[Froggy]

French and Scottish must be alike, I guess...
Maybe if you kiss me, I'll turn into a beautifule princess (but still High Maintenance!)

[kavatski]

Unfortunately I don't remember the specific details except that GM was offering a low interest rate on financing & leasing, and a cash discount on a purchase. This would have been some time in November that I saw the ad, though, so it's possible the offer ended or changed. If the 9-2X had existed a year ago I might have been tempted to choose it over my current Impreza wagon.

[S60]

Froggy, GMCC lease rates on Saab 9-2x at the moment are
2.9% on a 36 month term
3.9% on a 48 month term

and 2.9% if financing

[EV-Light]

those rates are high no?

[Froggy]

I am surprised I haven't seen any 9.2X on the road yet whereas you see tons and tons of WRX wagons MY2005. I know they are the same cars and the Saab is probably overpriced (+3K) but I'd expect to see at least one. I guess on this one, time is on my side as the longer they stay, the lower the Interest rate will be. I think 2.9 and 3.9 is still fairly high for a car which does not sell, at least in Ottawa... With this kind of rates, I'd rather take the S40 T5 AWD(3.8%)