USEFUL LINKS: Check Incentives | TrueCar | CreditReport.com | Carsdirect
This guide is meant to show you through the auto leasing process. I put this together based on my past experiences with leasing. Some experiences were good, others were less than perfect. Overall, I learned a lot about the leasing process and I think these recommendations will have a positive impact on your leasing experience. If I missed anything or if you disagree with some of my steps, please feel free to leave a comment.
Finding the Car
I usually start my research by visiting Edmunds.com and CarsDirect.com to get model/trim/options/pricing information about the car I intend to lease. You need to know exactly what you want because each option can change the price dramatically. CarsDirect.com does a better job letting you pick the correct combination of options for a specific trim.
Get Your Credit Score. Knowing your credit score is important because it qualifies you for the lowest money factors. Typically, I let my dealer know that my credit score is “XYZ” and I am looking for car “ABC”. Telling the dealer your credit score informs the dealer in advance that you are prepared to make a deal and you aren’t wasting their time negotiating. Since you don’t want your credit run multiple times from dealer-to-dealer, finding out ahead of time will keep your credit score from getting hit with too many inquiries (personal inquiries do not hurt your credit). Typically, I don’t even deal with dealers that request to run your credit before working with you or to get a test drive. You let them run your credit ONLY when the negotiation is complete and you are ready to begin paperwork. If you credit is less than perfect, leasing is not for you because you cannnot qualify for the lowest rates. In some cases, you won’t even qualify at all. Lease loans usually have stricter approval guidelines than purchasing loans.
You can use the following credit services to check your credit scores:
- freecreditscore.com (Free Credit Score available with enrollment. 7-day free trial membership)
- Experian Connect! (Not a free service)
- TransUnion Credit Monitoring (7-day free trial membership)
In my experience, most dealers I have worked with have used Experian or TransUnion credit scores. However, I recommend checking all three if you haven’t done so in a few years.
Locating a Dealer. Once you are set on the car, you have a couple of options. You can go to the manufacturer’s web site to search for all local dealers or use third-party quote systems like TrueCar.com or Edmunds.com to find local dealers. I personally prefer using TrueCar.com because it provides excellent data which is crucial when negotiating your lease.
Email or Call Dealers, Do Not Visit Dealerships unless you are just doing a test drive. Ideally, you want to email (since the process will then be in writing) your dealer to locate the car with the colors/options you want, let them know the term you want (months and miles per year), then ask for the following:
- MRSP (to make sure it doesn’t have ‘extras’ on it).
- Sale Price (start with invoice, or $500 below invoice and go from there)
- Money Factor
- Residual Value
- Acquisition/Bank Fee
- Dealer Doc Fee
- Other Fees (such as DMV, tire, etc…)
- Is there a disposition? Gap coverage? (these are important things to know!)
- Taxes (depending on which state you live in, find out if you have to pay those up front and/or if you need to pay for the entire car or just the depreciation)
Once you have those numbers, you can calculate your own payments to see if there are any discrepancies between your numbers and theirs. If you have never used my RWG Lease Calculator, you may want to read up on my “How To” post.
If the payments are still higher than you like, ask for the option to make “multiple security deposits” or MSDs. You basically pay security deposits to lower the Money Factor. This will lower the interest paid on your lease but increase your up-front costs. The good news is that you will get that money back at lease-end. If the numbers are still not to your satisfaction, try having the dealer thrown in some free oil changes to help you offset the costs. Now remember, if you trade-in or sell your car before your lease is up, you will LOSE your MSDs! If you put MSDs down, you better make sure you wait until your lease term ends.
Only work with dealers that are up front with you. A pleasant leasing experience is worth something, believe me. It will make you feel better bringing the car in for service and you won’t feel angry driving around in your car because you feel you got ripped off.
Avoid “All-In-One” Quotes. By those I mean “$1999 down, $399/month” type of quotes…the ones the dealers love to quote you. You want to avoid those because it’s easy to start losing track of what you’re actually paying for since everything is bundled and nothing is itemized. If this seems like nit-picking, it is, but you must realize that for every $100 paid in bogus charges, you are doing so with interest (and maybe even tax) if you roll it into your lease payments. Experienced lessees can take the “All-In-One” approach if they have already pre-calculated their payments and know what to expect.
The Numbers look Good, Now What? If you haven’t gone in for a test drive, go ahead and schedule a visit to your dealer. You will probably want to visit the person you’ve been dealing with via email, that way, he or she will already know you and won’t go into the “sales-mode”, thus making your test drive more enjoyable.
Got a Trade-In? If you do, negotiate it after the new car and keep it separately. I usually use this as a “deal-breaker” if the offer isn’t good enough (to see if they will bump out the trade value to make a sale). If you don’t like the offer, remember you can always get it appraised elsewhere or sell it on your own. You can get a good idea as to how much your trade is worth to a dealer by going to Edmunds.com and appraising your car at “GOOD/AVERAGE” condition to get a more “realistic” idea of the value of your car. If you are still financing your car and the offer is lower than the balance of your loan, you will have to pay the difference. If its more than your loan, the dealer will either give you the option to apply it to your new car or cut you a check (I generally prefer the check). If you are trading in a lease, the process is similar. The only difference is that you need to find out what your “PAYOFF” is from your bank and see how close the dealer’s offer comes to it. If your leased vehicle is a popular model, has low miles and is in great condition, you could get some money back.
What Should I Pay Up Front/At Signing? I normally advise people to pay the 1st Month Payment, Acquisition/Bank fee, DMV fee, Doc fee and Tire Tax (Some states will ask for the sales tax to be paid upfront instead of monthly). Sometimes you may be assessed other fees, so double check and make sure they aren’t bogus. Try not to put any money towards cap cost reduction, after all, this is a lease. In the event of an total loss accident or theft, you could lose a significant part of all the money you have put down (or all of it).
Beware of the Finance Guy/Gal. The Finance Guy/Gal is the dealer’s last ditch effort to sell you stuff you may or may not need. Seriously, do you really need anything more than the standard bumper-to-bumper warranty on a lease? You don’t need Lo-Jack on a lease, specially since most leases have GAP coverage.
Make sure you READ the papers BEFORE you sign. You got time, after all you negotiated online before you showed up to the dealership, so READ, make sure the numbers are correct and ask questions. Once you sign, the deal is binding by those terms.
The information provided by this site has been kindly provided by auto brokers and their partners. In an effort to comply with their wishes, please do not re-distribute this information without a reference link to this site. 
G,
I just want to tell you how valuable your website is and how it fills a much needed niche related to the often confused world of leasing.
I am interested in the luxury compact suv market (X3/Q5/GLK350/Tiguan)in NJ and can either begin a lease in August or Sept.
What are your thoughts on this landscape? Do you think I can walk away with any of these for less than $500 a month with no cap cost reduction?
@Russ. I noticed you saw my GLK post earlier today. Yeah right now, the Q5 and the Tiguan may be your best bets. I haven’t seen the lease rates yet, but I suspected they won’t be too different from last months. The Tiguan has generally been lease friendly, I don’t have those numbers yet, but I’ll look around for them. The X3 and GLK350 (which I like a lot as well) are pretty bad right now. The X3 and the GLK350 both qualify for the C4C gov’t program, but if you don’t have a clunker, it won’t really matter. Audi lease rates should be popping up any day now.
I don’t see Mercedes August 2009 C class numbers posted for residuals and mF’s… do you have those?
@Scott. Unfortunately, I don’t. Since the 2010 are officially out, I’m not seeing the 2009s anymore
G,
Great site. The information has been very informative as I look at leasing a vehicle. I have been trying to determine if the following is a good deal on a 2011 M37x with the Premium package. Specifically, if I should negotiate some of the leasing numbers:
39 months for 15k per year + 10k per year (25k total per year)
$3530 out of pocket
$1467 min drive off
$1000 loyalty rebate
Net Cap cost is $44,105.00. The residual for 39 months is 59% (26029.25). The money factor is .001180.
Thanks in advance for your assistance.
@Nice
I need to know what the MSRP is in order to calculate deal.
Also, this doesn’t seem like an IFS financed deal. Who are you using for the loan?
The current rate for the M37 is:
2011 INFINITI M37 SEDAN X AWD
36month | 15k miles | residual 55% | .00054 base money factor
You are getting a higher MF and a higher residual. If you aren’t using IFS, you should check if you lender provides GAP coverage. That’s a must.
Also, you will be out of warranty within the first 2 years. I normally do not advice people to lease cars and drive more than 75000 miles within 3 years unless they can write off the payments through their own business.
Anyway, whats the quote you got from your dealer? I don’t a monthly payment listed. Are you paying $3530 + $1467? Then applying the 1000 rebate? Please let me know how your dealer is planning to apply your down payment and rebate.
G,
Thanks for the reply. I appreciate you taking the time to look over these figures. I understand what you mean about the warranty although I think it is 60,000 miles, so I will change my mileage to 20,000/year. What do you mean by IFS financed deal?
I have contacted multiple dealers and I am awaiting their responses regarding the 2011 M37x. I have listed the initial responses with all of the factors in a spreadsheet that I can email you directly. This spreadsheet includes the information you have requested.
An IFS financed deal means it that the loan is given by Infiniti’s financing arm. Your lease rates do not look like they are coming from IFS, which means the dealer is selling the car to an outside bank and they will be financing your deal. This isn’t exactly a bad thing, but you need to check the fine print because each bank’s terms and conditions vary and things such as GAP insurance may not be available. I recommend finding out all the details of the lease before you sign on the dotted line. Not all leases are created equal.
As for the warranty, you are correct, it’s 4yr/60k. But even at 20k per year, you will still be out of warranty on the last 3 months if you do a 39-month deal. Probably not a big deal if the car has been meticulously taken cared of though.
Feel free to email me the info. I’ll look it over. g(at)ridewithg.com
I just sent you the information.
Thanks
@nice. I sent you an email. I think quotes 4 and 5 are your best bet. Let me know what you end up with.
Hi G!
I was wondering if you could help me out with a lease I’m trying to get within the next week. I’m looking to lease a 2011 Infiniti G25 Journey sedan. So far, the best quote I’ve gotten by email is:
MSRP: $34,420.00
Sale Price: $31,485.47
Money Factor: 0.00128
Residual Value: 64% FOR 10,000 MILES PER YEAR
Acq/Bank Fee: $595.00
Dealer doc fee? $599.00
Other fees: TAG $349.00
Monthly payment comes out to $327.10 + 7% tax = $350/month.
I used your lease calculator and the numbers were not adding up, but then I added the Acq/Bank fee to the sale price and I got the monthly payment they were quoting me. So I’m thinking if I pay the bank fee up front, the monthly payments should be $310 + tax. Do you think this is a good deal?
I’m actually trying to pay less that $300/month including taxes. Using the calculator, I would need to knock off $1,000 from the sale price. I can put that much down to lower the payments but obviously I would rather the dealer discount it from the sale price. Do you think this is reasonable? If so, do you have any recommendations for how to go about requesting this? Thanks in advance!
@veronica
The best discount I see in my area (Southern Cal) is 11% off the MSRP. Right now, you are at around 8%. Assuming you could get that extra 3%, it would only be another $500 off your sale price, which is still short of the $1000 you are looking for. Nevertheless, that’s still a good discount. I recommend going to TrueCar.com to double check what your “lowest local price” is, and see if it’s lower than the 8% you are getting. If it’s lower, try to get your dealer to match it.
One thing I noticed is that your dealer doc fee is pretty high ($599). Dealer doc fee is pure profit for the dealers. In the past, it was much easier to have them reduce it or waive it out right. Nowadays, I find that a lot of folks have difficulty getting the dealer to knock that off. Doesn’t mean you shouldn’t try, though.
I think you are going about this the right way. I always recommend paying the bank acquisition, dealer doc and tags upfront, instead of rolling it into your lease loan. The MF isn’t all that low (but lower than most), so it doesn’t make sense to pay interest on that. By the way, double check on the MF. I was told the G25′s MF this month is 0.00123 not 0.00128. It’s a difference of about $3 per month. You may also want to inquire about Multiple Security Deposits (MSD) instead of putting $1000 down towads cap reduction. MSDs can be used to “buy down” the money factor, thus reducing your monthly payment. You also get that money back at the end your lease.
Let me know how it goes.
G-
I’m looking at leasing a 2011 G37 with Premium and Navigation Packages (Phoenix, AZ). The lease terms are as follows:
39 months | 15K | $1,505 due at signing
MSPR: $41,570
Sale Price: $38,109
Money Factor .00111
Residual Value 59%
Acquisition/Bank Fee $595
Dealer Doc Fee $449
Licensing/DMV fees $605
Disposition fee $350
Gap Coverage is included
Local/State Taxes (paid monthly) 9.3%
I’ve not done a lease before…does this look reasonable or should I keep shopping.
Thanks,
Doug
Doug, based on the numbers you provided, I am getting about $474 with tax, assuming you pay your fees and 1st month payment upfront (around 1500). This is also assuming you roll in the 595 acquisition fee in. The disposition is usually due at the end of the lease, so you don’t need to pay that up front. This is actually not a bad deal, but it can be better. Based on TrueCar’s Phoenix area data, G37 sedans (i’m assuming you are looking at a sedan) are getting approximately 12% off MSRP. You are getting about 8%, so there’s definitely some room to go down (right now you’re paying slightly over invoice). A selling price of around $36,500 would be ideal. If you manage to do that, you will see your payments drop nearly $50 a month.
I think $400 a month (tax included) may be unrealistic since there isn’t any customer rebate/cash available. Dealers do have marketing cash available, but it is generally not available for leases. You could inquire about that however. Here’s a link to Edmund’s incentives page regarding the marketing support. If you find your dealer unwilling to negotiate, wait until end of the month and see if they are more willing then.
G-
With the previous lease terms in mind what do you suggest I do to get my payments down to $400/month?
Thanks again,
Doug
G
You are correct I am looking at a Sedan. What I have been able to track down and see on the website is that I am paying slightly “under” invoice, or at least that’s what I saw on TrueCar based on options and from Dealership information.
Here is what I have gotten from the Dealership:
Invoice MSRP
BASE $32,385 $35,050
IKP $295 $350
ILLUMINATED KICK
INT $519 $600
INTERIOR ACCENT P
MNF $137 $195
CARPETED TRUNK MA
NAV $1,603 $1,850
NAVIGATION PACKAG
PRM $1,862 $2,150
PREMIUM PACKAGE
TIR $433 $500
PERFORMANCE TIRE
50S $0 $0
50 STATE EMISSION
Freight Charge $875 $875
Total $38,109 $41,570
Do your comments still apply and do you think I can likely get another 4% off the Sale price?
Thanks,
Doug
Doug, the base price of the G37 Journey on TrueCar is higher than what you dealer stated ($36275). As a matter of fact, it also varies from Edmunds’ numbers too which is $35400. Either way, I’m thinking this car was probably produced last year, before a price increase. Even so, I still think you should be able to knock more off the price. The estimated dealer cost on this model is about 13.5% less than MSRP, so at 12% discount, the dealer still makes a little money. In addition, Infinitis have a 1% holdback if the car has been on the lot less than a month, so if the dealer feels generous, they could share some of that with you.
G,
I’m putting together a list that shows that acquisition fee for each auto manufacturer’s lease program… Is this something you already have? I know leasecompare’s facebook site does a good job of mentioning that in each of their lease program posts.. maybe you could do the same?? Just a thought… Keep up the awesome work! I’m looking forward to leasing a new car for my wife soon…
@Jon, sorry for the late reply. I don’t currently have a list of acquisition fees. I will look into it though. That information is fairly easy to find on the manufacturer’s websites. I will get on that once things die down a bit.
I think you need to know, as you have this website- CreditReport.com- as a direct recommended link from your webpage, that this website is VERY misleading and very difficult to get cancelled without VERY aggressive sales tactics and a very sneaky attempt to charge $1 even if it was cancelled. We signed up based on you having it up as a link and were very much under the impression it was going to give all three scores/reports as everyone knows you need, but as soon as signup was complete, you get one report- Experian and a link to “get all 3″ directly within the report and when clicked it’s a page to sell you all three for like $33!! When we called immediately to cancel our account, (have to within 7 days anyway to avoid $19.95 membership fee which is probably recurring- didn’t look as I didn’t plan to keep it) the representative started right in with hard selling tactics with my husband offering him the 3 reports at half price…she was talking so fast and so pushy that even he had trouble getting her to stop and just cancel it. She then told him that we would have a $1 charge on our account, after trying repeatedly to get us to tell us what webpage we got the link from for their website and so on…very bizarre. We had to ask for her supervisor and after quite a wait, had to go through it all again and ONLY after we insisted that it be cancelled immediately did she do so…she even tried to tell us that our account would be cancelled effective May 1 even though today is April 23rd… again, bizarre! When we tried to directly ask her about the salesgirl’s behavior and the $1 charge (which according to the websites’ FAQ’s is NOT a charge, only a “test” charge to make sure your credit card is “real” and will not remain if cancelled- NOT what she told us!) she would only repeat that “your account has been cancelled effective immediately sir.” Just a warning….
Thanks for the feedback Holly. I have suspend the CreditReport.com link off the site. It is definitely not worth recommending to readers if your experience is this bad. It’s tough enough to negotiate a deal for a car, the last thing people need is people trying to up sell you on credit scores. Again, I thank you for your feedback, I greatly appreciate it.
Hi G,
Long time lurker here. Can you elaborate on incentives for leasing such as “$1000 towards capital reduction”? What’s the formula to calculate the net effect on monthly fee? Much appreciated.
The way I treat cap reduction is by subtracting it from the sale price. If this is cash from the dealer, the rating should still be valid. If its money coming from your own pocket, then the rating won’t accurately reflect how good the deal is. Looks like the calculator is due for another revision.