Looking to Lease a new car. Whats the best approach for a low car payment?

Question

Have lots of time.

Answer 1

First off you do understand in a Lease you do not own the car, but are paying for the depreciation that occurs during the time you are using the car.

So what you are paying for is
1. The cost of the car now - The residual value of the car in the future(ie in a 3 year lease, what the car will be worth in 3 years)

2. Excess mileage. Have a good sense of what type of mileage you will be using and pay for about 10% more up front, it will save you money in the long run.


That said, the best approach for a low car payment is to get the dealership to come down as low as you can get them on the cost of the car now (The first number of the formula in #1). And lease a car that will have a high residual value (The second number of the formula in #1)

High residual value vehicles will typically be japanese vehicles just because people want them more and they are in higher demand.

Dealerships can play with both numbers, though typically the first number is easier to play with than the second. You want the difference of these two numbers to be as small as possible.

ie.
Honda Civic. Selling price = $18000, Residual value after 3 years $13000.
You'll pay 18000-13000 = 5000 (principal) over 3 years.
(NOT including interest, your principal payments will be approximately $138/month)

However if you are a savvy negotiator and get the selling price down to $16000, and get the residual value to $13500
You'll pay 16000-13500 = 2500 (principal) over 3 years
(NOT including interest, your principal payments will be approximately $70/month)

You can see the big difference! Most people don't know you can bargin down the lease by bargining down the selling price of the vehicle. (Which is the number they use to determine your lease payments)

Don't let them talk about how much you can afford a month. That's the trap. They will work out interest rates and RAISE them if necessary to maximize their profit.

Lease are considered good deals if you are typically only planning to keep the car for a few years (3-5) and you know for sure you will want a new car in 3-5 years.

Don't let people tell you that a purchase is always a better deal, it's not if you end up upside-down in your purchase like many people on this board have and find themselves owing thousands on a car they want to get rid off.

However, don't sign a lease if you aren't willing to commit to it for the duration, there are heavy penalties for trying to terminate a lease early too.

Educate your self and good luck on your new car purchase or lease!

Answer 2

Well a lease is a very complicated thing. You need to find the car you want firstly. I would recommend a vehicle that has manufacturer assisted rates and dealer cash. That means rebates, For instance Ford, or any GM vehicle. If your going to Toyota, Volkswagen, or Nissan, it is a little tougher despite how much time you have because these cars sell if you buy them or not so the manufacturer doesn't need to put rebates out there. The longer the lease term and the lower the mileage allotment the less your monthly payment is. I would recommend going to two dealers and working them against each other through there internet webpages. Internet managers know they have to give you their lowest price or you won't even come in. That is the most sure way to get a great deal. Good Luck on your shopping.

Answer 3

1. Never negotiate payments only. Negotiate the price of the car as if you were purchasing. The lease payments are based on the Capitalized Cap Cost (leasing term for the selling price of the car).

2. Get as low a money factor as you can. This term is the same as APR. Just multiply it with 2400 and you'll get the approximate APR.

3. Check Swapalease.com and Leasetrader.com to see what others are paying. Remember, if you ever want to get out of your lease early, these sites are where you'll list so a lease with lowest payment possible will sell first.

4. Check out this great leasing site http://generalcar.com to see what you should pay.

5. Read http://www.carbuyingtips.com/lease.htm

Answer 4

a lease is never a good option, your better off buying a car. i would go to your bank to get a loan, they offer better rates.